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Aging, cognitive abilities and retirement

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Abstract

We investigate the relationship between ageing, cognitive abilities and retirement using the Survey on Health, Ageing and Retirement in Europe (SHARE), a household panel that offers the possibility of comparing several European countries using nationally representative samples of the population aged 50+. The human capital framework suggests that retirement may cause an increase in cognitive decline, since after retirement individuals lose the market incentive to invest in cognitive repair activities. Our empirical results, based on an instrumental variable strategy to deal with the potential endogeneity of retirement, confirm this key prediction. They also indicate that education plays a fundamental role in explaining heterogeneity in the level of cognitive abilities.

Suggested Citation

  • Fabrizio Mazzonna & Franco Peracchi, 2009. "Aging, cognitive abilities and retirement," CEIS Research Paper 152, Tor Vergata University, CEIS, revised 05 Dec 2012.
  • Handle: RePEc:rtv:ceisrp:152
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    Keywords

    Aging; cognitive abilities; retirement; education; SHARE;

    JEL classification:

    • 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

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