Short and long run estimates of the local effects of retirement on health.

Fe, Eduardo and Hollingsworth, Bruce (2015): Short and long run estimates of the local effects of retirement on health.

Abstract

We explore the existence of short and long term effects of retirement on health. Short term effects are estimated with a regression discontinuity design which is robust to weak instruments and where the underlying assumptions of continuity of potential outcomes are uncontroversial. To identify the long term effects we propose a parametric model which, under strong assumptions, can separate normal deterioration of health from the causal effects of retirement. We apply our framework to the British Household Panel Survey, and find that retirement has little effect on health. However, our estimates suggest that retirement opens the gate to a sedentary life with an impoverished social component and this is a channel through which retirement could indirectly affect health in the long run.

• Item Type: MPRA Paper
• Language: English
• Keywords: Regression discontinuity, retirement, instrumental variables, health, wild bootstrap.
• Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - General; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C30 - General; I - Health, Education, and Welfare > I1 - Health > I12 - Health Behavior; I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J26 - Retirement ; Retirement Policies

References

Aguiar, M. and E. Hurst (2005). Consumption versus expenditure. Journal of Political Economy 113, 919{948.

Angrist, J., G. Imbens, and D. Rubin (1996). Identi�cation of causal e�ects using instrumental variables. Journal of the American Statistical Association 91, 444{455.

Banks, J. and S. Smith (2006). Retirement in the U.K. Oxford Review of Economic Policy 22, 40{56.

Barness, L., C. Mendes de Leon, R. Wilson, J. Bienias, and D. Evans (2004). Social resources and cognotive decline in a population of older African Americans and whites. Neurology 12, 2322{2326.

Battistin, E., A. Brugiavini, E. Rettore, and G. Weber (2009). The retirement consumption puzzle: Evidence from a Regression Discontinuity approach. American Economic Review 99, 2209{2226.

Bertrand, M., E. Du o, and S. Mullainathan (2004). How much should we trust di�erence-in-di�erences estimates? Quarterly Journal of Economics. 119, 249{275. Blundell, R., C. Meghir, and S. Smith (2002). Pension incentives and the pattern of early retirement. Economic Journal 112, C153{C170. Bound, J. (1991). Self-reported versus objective measures of health in retirement models. Journal of Human Resources 26, 106{138. Bound, J., D. Jaeger, and R. Baker (1995). Problems with instrumental variables estimation when the correlation between the instruments and the endogenous explanatory variable is weak. Journal of the American Statistical Association 90, 443{450. Bound, J., T. Stinebrickner, and T. Waidmann (2010). Health, economic resources and the work decision of older men. Journal of Econometrics 156, 106{129.