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Integration or Isolation? The Impact of Retirement on Social Capital

Author

Listed:
  • Atalay, Kadir

    (University of Sydney, Australia)

  • Staneva, Anita

    (Griffith University, Australia)

  • Zhu, Rong

    (Flinders University, Australia)

Abstract

This paper examines the causal impact of retirement on social capital using nationally representative Australian panel data. Exploiting the eligibility age for the Age Pension, we find that retirement significantly enhances social capital by increasing social connectedness and community involvement. These gains improve physical and mental health, with effects comparable to those of physical activity. However, older individuals' perceptions of social relationships remain unchanged. Our findings highlight a key policy trade-off: while raising the retirement age may boost labor force participation, it may reduce opportunities for meaningful social engagement and, in turn, undermine the health of older adults.

Suggested Citation

  • Atalay, Kadir & Staneva, Anita & Zhu, Rong, 2026. "Integration or Isolation? The Impact of Retirement on Social Capital," IZA Discussion Papers 18396, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18396
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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