IDEAS home Printed from https://ideas.repec.org/p/hhs/iuiwop/0928.html
   My bibliography  Save this paper

Work ‘til You Drop: Short- and Longer-Term Health Effects of Retirement in Europe

Author

Listed:

Abstract

Declining fertility rates and increasing life expectancy necessitate a higher labor participation rate among older people in order to sustain pension systems and boost economic growth. At the same time, researchers have only recently begun to pay attention to the health effects of a longer working life, with rather mixed results thus far. Utilizing panel data from eleven European countries, and two distinct identification strategies to deal with endogeneity, we provide new evidence of the health effects of retirement.In contrast to prior research, we analyze both the impact of being retired and the effect of spending longer time in retirement. Using spouses’ characteristics as instruments, while taking precautions to ensure validity, we find a robust, negative impact of being retired and spending longer time in retirement on selfassessed, general, mental and physical health.In addition, we show that the impact on selfassessed health remains similar in models using instruments from previous research while also including individual- and time-fixed effects to remove time-invariant unobserved heterogeneity between individuals as well as common health shocks.Overall, the results suggest that this innovation and the fact that we take lagged effects into account explain the differences in comparison to prior multi-country research using these instruments. While the short-term health impact of retirement in Europe remains uncertain, the medium- to long-term effects appear to be negative and economically large.

Suggested Citation

  • Sahlgren, Gabriel H., 2012. "Work ‘til You Drop: Short- and Longer-Term Health Effects of Retirement in Europe," Working Paper Series 928, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0928
    as

    Download full text from publisher

    File URL: http://www.ifn.se/wfiles/wp/wp928.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Andries De Grip & Maarten Lindeboom & Raymond Montizaan, 2012. "Shattered Dreams: The Effects of Changing the Pension System Late in the Game," Economic Journal, Royal Economic Society, vol. 122(559), pages 1-25, March.
    2. Joshua D. Angrist & Alan B. Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 69-85, Fall.
    3. Fe, Eduardo & Hollingsworth, Bruce, 2012. "Estimating the eect of retirement on mental health via panel discontinuity designs," MPRA Paper 38162, University Library of Munich, Germany.
    4. García-Gómez, Pilar & Jones, Andrew M. & Rice, Nigel, 2010. "Health effects on labour market exits and entries," Labour Economics, Elsevier, vol. 17(1), pages 62-76, January.
    5. Bonsang, Eric & Klein, Tobias J., 2012. "Retirement and subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 311-329.
    6. Hernaes, Erik & Markussen, Simen & Piggott, John & Vestad, Ola L., 2013. "Does retirement age impact mortality?," Journal of Health Economics, Elsevier, vol. 32(3), pages 586-598.
    7. Soong-Nang Jang & Sung-Il Cho & Jiyeun Chang & Kachung Boo & Hyun-Goo Shin & Hyejung Lee & Lisa F. Berkman, 2009. "Employment Status and Depressive Symptoms in Koreans: Results From a Baseline Survey of the Korean Longitudinal Study of Aging," Journals of Gerontology: Series B, Gerontological Society of America, vol. 64(5), pages 677-683.
    8. Eugenio Zucchelli & Andrew M. Jones & Nigel Rice & Anthony Harris, 2010. "The Effects of Health Shocks on labour Market Exits: Evidence from the HILDA Survey," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 13(2), pages 191-218.
    9. Bonsang, Eric & Adam, Stéphane & Perelman, Sergio, 2012. "Does retirement affect cognitive functioning?," Journal of Health Economics, Elsevier, vol. 31(3), pages 490-501.
    10. Michaud, Pierre-Carl & van Soest, Arthur, 2008. "Health and wealth of elderly couples: Causality tests using dynamic panel data models," Journal of Health Economics, Elsevier, vol. 27(5), pages 1312-1325, September.
    11. Mazzonna, Fabrizio & Peracchi, Franco, 2012. "Ageing, cognitive abilities and retirement," European Economic Review, Elsevier, vol. 56(4), pages 691-710.
    12. Barbara Hanel, 2010. "Disability Pensions and Labor Supply," Working Papers 086, Bavarian Graduate Program in Economics (BGPE).
    13. Andreas Kuhn & Jean-Philippe Wuellrich & Josef Zweimüller, 2010. "Fatal attraction? Access to early retirement and mortality," IEW - Working Papers 499, Institute for Empirical Research in Economics - University of Zurich.
    14. Michael Insler, 2014. "The Health Consequences of Retirement," Journal of Human Resources, University of Wisconsin Press, vol. 49(1), pages 195-233.
    15. Hanel, Barbara, 2012. "The effect of disability pension incentives on early retirement decisions," Labour Economics, Elsevier, vol. 19(4), pages 595-607.
    16. repec:dau:papers:123456789/12129 is not listed on IDEAS
    17. Grip Andries de & Dupuy Arnaud & Jolles Jelle & Boxtel Martin van, 2012. "Retirement and cognitive development: are the retired really inactive?," ROA Research Memorandum 003, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    18. Johnston, David W. & Lee, Wang-Sheng, 2009. "Retiring to the good life? The short-term effects of retirement on health," Economics Letters, Elsevier, vol. 103(1), pages 8-11, April.
    19. Rob Euwals & Elisabetta Trevisan, 2011. "Early Retirement and Financial Incentives: Differences Between High and Low Wage Earners," CPB Discussion Paper 195, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Susann Rohwedder & Robert Willis, 2009. "Mental Retirement," Working Papers WR-711, RAND Corporation.
    21. Lucas Ronconi & Timothy T. Brown & Richard M. Scheffler, 2012. "Social capital and self‐rated health in Argentina," Health Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 201-208, February.
    22. repec:fth:prinin:455 is not listed on IDEAS
    23. Heather L. Koball & Emily Moiduddin & Jamila Henderson & Brian Goesling & Melanie Besculides, 2010. "What Do We Know About the Link Between Marriage and Health?," Mathematica Policy Research Reports 5aa5d9b9826649f791b5324af, Mathematica Policy Research.
    24. Coe, Norma B. & Zamarro, Gema, 2011. "Retirement effects on health in Europe," Journal of Health Economics, Elsevier, vol. 30(1), pages 77-86, January.
    25. Raquel Fonseca Benito & Yuhui Zheng, 2011. "The Effect of Education on Health Cross-Country Evidence," Working Papers 864, RAND Corporation.
    26. Sukyung Chung & Marisa E. Domino & Sally C. Stearns, 2009. "The Effect of Retirement on Weight," Journals of Gerontology: Series B, Gerontological Society of America, vol. 64(5), pages 656-665.
    27. Susann Rohwedder & Robert J. Willis, 2010. "Mental Retirement," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 119-138, Winter.
    28. John Bound & Timothy Waidmann, 2007. "Estimating the Health Effects of Retirements," Working Papers wp168, University of Michigan, Michigan Retirement Research Center.
    29. Montizaan, Raymond & Cörvers, Frank & De Grip, Andries, 2010. "The effects of pension rights and retirement age on training participation: Evidence from a natural experiment," Labour Economics, Elsevier, vol. 17(1), pages 240-247, January.
    30. Dhaval Dave & R. Inas Rashad & Jasmina Spasojevic, 2008. "The Effects of Retirement on Physical and Mental Health Outcomes," Southern Economic Journal, Southern Economic Association, vol. 75(2), pages 497-523, October.
    31. Stefanie Behncke, 2012. "Does retirement trigger ill health?," Health Economics, John Wiley & Sons, Ltd., vol. 21(3), pages 282-300, March.
    32. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section..
    33. Norma B. Coe & Hans‐Martin von Gaudecker & Maarten Lindeboom & Jürgen Maurer, 2012. "The Effect Of Retirement On Cognitive Functioning," Health Economics, John Wiley & Sons, Ltd., vol. 21(8), pages 913-927, August.
    34. Beatrice Scheubel & Daniel Schunk & Joachim Winter, 2009. "Don't Raise the Retirement Age! An Experiment on Opposition to Pension Reforms and East-West Differences in Germany," CESifo Working Paper Series 2752, CESifo Group Munich.
    35. Stancanelli, Elena G. F., 2012. "Spouses' Retirement and Hours Outcomes: Evidence from Twofold Regression Discontinuity with Differences-in-Differences," IZA Discussion Papers 6791, Institute for the Study of Labor (IZA).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peter Eibich, 2014. "Understanding the Effect of Retirement on Health Using Regression Discontinuity Design," SOEPpapers on Multidisciplinary Panel Data Research 669, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. repec:spr:jopoec:v:31:y:2018:i:1:d:10.1007_s00148-017-0664-x is not listed on IDEAS
    3. Hernán Bejarano & Hillard Kaplan & Stephen Rassenti, 2014. "Effects of Retirement and Lifetime Earnings Profile on Health Investment," Working Papers 14-21, Chapman University, Economic Science Institute.
    4. Eibich, Peter, 2015. "Understanding the effect of retirement on health: Mechanisms and heterogeneity," Journal of Health Economics, Elsevier, vol. 43(C), pages 1-12.

    More about this item

    Keywords

    Health; Retirement; SHARE; SHARELIFE;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:0928. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elisabeth Gustafsson). General contact details of provider: http://edirc.repec.org/data/iuiiise.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.