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Mental Retirement

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  • Susann Rohwedder

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Abstract

Some studies suggest that people can maintain their cognitive abilities through "mental exercise." This has not been unequivocally proven. Retirement is associated with a large change in a person's daily routine and environment. In this paper, the authors propose two mechanisms how retirement may lead to cognitive decline. For many people retirement leads to a less stimulating daily environment. In addition, the prospect of retirement reduces the incentive to engage in mentally stimulating activities on the job. They investigate the effect of retirement on cognition empirically using cross-nationally comparable surveys of older persons in the United States, England, and 11 European countries in 2004. They find that early retirement has a significant negative impact on the cognitive ability of people in their early 60s that is both quantitatively important and causal. Identification is achieved using national pension policies as instruments for endogenous retirement.

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Bibliographic Info

Paper provided by RAND Corporation Publications Department in its series Working Papers with number 711.

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Length: 26 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:ran:wpaper:711

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Keywords: cognition; retirement; human capital; international comparison; HRS; SHARE; ELSA;

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  1. Heckman, James J, 1995. "Lessons from the Bell Curve," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1091-1120, October.
  2. Norma B. Coe & Gema Zamarro, 2008. "Retirement Effects on Health in Europe," Working Papers 588, RAND Corporation Publications Department.
  3. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, May.
  4. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
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