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Understanding cognitive decline in older ages: The role of health shocks

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  • Schiele, Valentin
  • Schmitz, Hendrik

Abstract

Individual cognitive functioning declines over time. We seek to understand how adverse physical health shocks in older ages contribute to this development. By use of event-study methods and data from the USA, England and several countries in Continental Europe we find evidence that health shocks lead to an immediate and persistent decline in cognitive functioning. This robust finding holds in all regions representing different health insurance systems and seems to be independent of underlying individual demographic characteristics such as sex and age. We also ask whether variables that are susceptible to policy action can reduce the negative consequences of a health shock. Our results suggest that neither compulsory education nor retirement regulations moderate the effects, thus emphasizing the importance of maintaining good physical health in old age for cognitive functioning.

Suggested Citation

  • Schiele, Valentin & Schmitz, Hendrik, 2021. "Understanding cognitive decline in older ages: The role of health shocks," Ruhr Economic Papers 919, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:919
    DOI: 10.4419/96973065
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    Cited by:

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    2. Freise, Diana & Schmitz, Hendrik & Westphal, Matthias, 2022. "Late-career unemployment and cognitive abilities," Journal of Health Economics, Elsevier, vol. 86(C).

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    More about this item

    Keywords

    Cognitive decline; health shocks; retirement; education; event study;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • I1 - Health, Education, and Welfare - - Health
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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