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Retirement and healthcare utilization

Author

Listed:
  • Wolfgang Frimmel
  • Gerald J. Pruckner

Abstract

Pension systems and reforms thereof are often discussed in the context of financial viability. In industrialized countries, these debates grow in intensity with the aging of the population; however, an increase in retirement age may create unintended side effects with regards to retiree health or healthcare costs. This study empirically analyzes the effect of (early) retirement on individual inpatient and outpatient healthcare expenditure in Austria. We use comprehensive labor market and retirement data from the Austrian Social Security Database, together with detailed information about individual inpatient and outpatient healthcare service utilization in the province of Upper Austria. To account for endogeneity in retirement decisions, we exploit exogenous variation in the early retirement age as induced by two Austrian pension reforms (i.e., those in 2000 and 2003). We find there to be significant negative effects of retirement on healthcare expenditure. For both genders, retirement reduces subsequent expenditure for outpatient medical attendance and hospitalization. Analyses of disaggregated components of healthcare expenditure confirm a positive health effect caused by physical and emotional relief following retirement. Apart from direct health effects, the results also reveal behavioral changes in the utilization of healthcare services. These changes in health behavior seem particularly relevant among blue-collar workers.

Suggested Citation

  • Wolfgang Frimmel & Gerald J. Pruckner, 2018. "Retirement and healthcare utilization," Economics working papers 2018-02, Department of Economics, Johannes Kepler University Linz, Austria.
  • Handle: RePEc:jku:econwp:2018_02
    Note: English
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    File URL: http://www.econ.jku.at/papers/2017/wp1802.pdf
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    More about this item

    Keywords

    retirement; healthcare expenditure; health behavior; instrumental variable;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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