Friday, September 14, 2012

Does the retirement age have an impact on when you die?

Being active in old age is thought to improve life quality, health and ultimately longevity. My grand-father painted and played brain games until late in his life, and made it to 92 really enjoying his last years. But beyond such leisurely activities, working also keeps you active. Does retiring later also prolong one's life? Answering that question is not straightforward because of the reverse causality. One may be able to work longer because one is of better health and thus will live longer. And of course, those who die early may also have retired early due to health reasons.

Erik Hernaes, Simen Markussen, John Piggott and Ola Vestad look at Norwegian administrative data and find no relationship between retirement age and mortality. To avoid the endogeneity issues, they exploit the fact that the retirement age was gradually decreased for some employers. The study also takes into account that employees may have switched jobs because of these changes. They check on the impact of the actual retirement age on mortality instrumenting with the entitled retirement age, and no matter the controls there is no relationship. So it looks like being active only has an impact on the enjoyment of life in the latter years.

No comments: