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Do Pension Benefits Accelerate Cognitive Decline? Evidence from Rural China

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  • Nikolov, Plamen

    (Harvard Institute for Quantitative Social Science)

  • Adelman, Alan

    (State University of New York)

Abstract

Higher life expectancy and rapidly aging populations have led to the introduction of pension programs in developing countries in the last two decades. Using the introduction of a new public policy in China, we estimate the effects of pension benefits on individual cognition, measured by episodic memory and intact mental status, among individuals ages 60 and above. We find large and significant negative effects of the provision of pension benefits on cognitive functioning among the elderly. We find the largest effect of the program on delayed recall, a measure implicated in neurobiological research as an important predictor of the onset of dementia. We show that the program leads to more negative impacts among the female sample. Our findings support the mental retirement hypothesis that decreased mental activity results in atrophy of cognitive skills. We show that retirement plays a significant role in explaining cognitive decline at older ages.

Suggested Citation

  • Nikolov, Plamen & Adelman, Alan, 2019. "Do Pension Benefits Accelerate Cognitive Decline? Evidence from Rural China," IZA Discussion Papers 12524, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12524
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    References listed on IDEAS

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    Cited by:

    1. Nikolov, Plamen & Adelman, Alan, 2019. "Do private household transfers to the elderly respond to public pension benefits? Evidence from rural China," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    2. Nikolov, Plamen & Bonci, Matthew, 2020. "Do public program benefits crowd out private transfers in developing countries? A critical review of recent evidence," World Development, Elsevier, vol. 134(C).
    3. Nikolov, Plamen, 2022. "Writing Tips for Economics Research Papers – 2021-2022 Edition," IZA Discussion Papers 15057, Institute of Labor Economics (IZA).
    4. Nikolov, Plamen, 2020. "Writing Tips for Economics Research Papers," MPRA Paper 105088, University Library of Munich, Germany.

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    More about this item

    Keywords

    middle-income countries; mental retirement; health; aging; cognition; cognitive functioning; life-cycle; developing countries; China;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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