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RAND Roybal Center for Health Policy Simulation

Health Impacts of Retirement

Specific Aims

What are the health impacts of retirement? As talk of raising retirement ages in pensions and social security schemes continues around the world, it is important to know both the costs and benefits for the individual as well as the governments' budgets. In this study, we propose to use large scale survey data on elderly populations in Europe to examine the following specific questions in a multi-country setting:

1. What is the effect of retirement on measures of general health?
2. What is the effect of retirement on measures of mental health?

The Survey of Health, Aging and Retirement in Europe (SHARE) dataset will be used to address these questions. We use country-specific early and full retirement ages as an instrument for retirement behavior in a Regression Discontinuity design (RD) approach. These retirement ages clearly induce retirement, while not being related to an individual's health. Further, it is hard to imagine that the relationship between age and health is discontinuous at the exact ages in which retirement is made possible in different countries. Preliminary results show significant evidence that retirement has a health-preserving effect on overall general health for men. The preliminary results for depression are mixed, and indicate that how one measures depression may be a key to defining the effects. More work has to be done in this respect. In addition, it seems that the effects of retirement on depression differ across European countries. The analysis for women remains an open issue. Other future research includes more specification checks to further test the robustness of these findings. Additionally we want to explore the possibility of identifying differing health effects along the age gradient by exploiting the different ages of retirement eligibility in the different countries. This is something that cannot easily be done in country-specific studies, thus this is something new we would contribute to the literature.