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Mental Retirement: Evidence from Global Aging Data

Nishimura, Yoshinori and Oikawa, Masato (2017): Mental Retirement: Evidence from Global Aging Data.

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Abstract

This study analyzes the effect of retirement on cognitive function; specifically, the hypothesis from human capital theory that because cognitive investment increases a worker's wage, workers may invest in their cognitive ability more than retirees, contributing to a post-retirement decline in cognitive function. While this topic is of great interest to health economics, we show that the method of analysis of some previous studies is not valid for examining this effect, and we propose an alternative method that addresses this concern. Further, our estimates indicate that retirement has only a weak effect on cognitive ability in a wide range of analyzed countries and heterogeneous groups. Therefore, according to our analysis, policies that have been widely adopted in developed countries to delay retirement, such as increasing the pensionable age, appear to have little detrimental affect on post-retirement cognitive ability.

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