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Mental retirement and non-contributory pensions for the elderly poor in Peru

Author

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  • Rafael NOVELLA
  • Javier OLIVERA

Abstract

This paper analyses the effects of retirement on cognitive abilities for the elderly poor on the basis of the “mental retirement” effect that accompanies retirement. Given the recent emergence and expansion of non-contributory pension programs to alleviate poverty in old-age across low and middle income countries, attention should be pay to the potential acceleration of cognitive decline when individuals retire, i.e. when there is a decrease in their engagement on cognitive demanding activities. We use a unique and recent survey of the poor elderly in Peru (ESBAM) which includes a cognitive test and serves as the baseline for a non-contributory pension program. We find a significant negative effect of retirement on cognitive ability after controlling for a number of demographics and objective health measures, and even after applying instrumental variables to deal with the potential endogeneity of retirement.

Suggested Citation

  • Rafael NOVELLA & Javier OLIVERA, 2014. "Mental retirement and non-contributory pensions for the elderly poor in Peru," Working Papers of Department of Economics, Leuven ces14.05, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:ces14.05
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    Cited by:

    1. Oscar Flores-Flores & Ruth Bell & Rodney Reynolds & Antonio Bernabé-Ortiz, 2018. "Older adults with disability in extreme poverty in Peru: How is their access to health care?," PLOS ONE, Public Library of Science, vol. 13(12), pages 1-15, December.
    2. Laura Juárez & Yunuen Nicte Rodríguez Piña, 2020. "El efecto de las pensiones no contributivas sobre el bienestar subjetivo de los adultos mayores en México," Serie documentos de trabajo del Centro de Estudios Económicos 2020-03, El Colegio de México, Centro de Estudios Económicos.
    3. Miguel Ángel Borrella Mas & Mariano Bosch Mossi & Marcello Sartarelli, 2016. "Non-Contributory Pensions Number-Gender Effects on Poverty and Household Decisions," Working Papers. Serie AD 2016-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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