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The effect of retirement on elderly cognitive functioning

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  • Atalay, Kadir
  • Barrett, Garry F.
  • Staneva, Anita

Abstract

Cognitive functioning exhibits a clear lifecycle pattern with a general deterioration over older ages. This article estimates the short-term effect of retirement on cognitive performance of elderly Australians by exploiting the exogenous variation in retirement decisions induced by changes in social security eligibility rules. The empirical results show that on average retirement has a negative but modest effect on cognition, and the rate of cognitive decline with age is greater for men than women. The results for women display no significant effects on working memory and speed of information processing. The article further adds to the literature by providing evidence on the possible mechanisms through which retirement could affect individual's cognitive performance. We find that moving into retirement leads women to increase the time spent in mental and household activities, which may in part explain the modest effect we observe for women.

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  • Atalay, Kadir & Barrett, Garry F. & Staneva, Anita, 2019. "The effect of retirement on elderly cognitive functioning," Journal of Health Economics, Elsevier, vol. 66(C), pages 37-53.
    • Handle: RePEc:eee:jhecon:v:66:y:2019:i:c:p:37-53
    DOI: 10.1016/j.jhealeco.2019.04.006
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    9. Salm, Martin & Siflinger, Bettina & Xie, Mingjia, 2021. "The Effect of Retirement on Mental Health: Indirect Treatment Effects and Causal Mediation," Other publications TiSEM e28efa7f-8219-437c-a26d-2, Tilburg University, School of Economics and Management.
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    24. Chen, Fengming & Wakabayashi, Midori & Yuda, Michio, 2024. "The impact of retirement on health: Empirical evidence from the change in public pensionable age in Japan," The Journal of the Economics of Ageing, Elsevier, vol. 28(C).

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