Mental retirement and schooling

TY - JOUR

T1 - Mental retirement and schooling

AU - Bingley, Paul

AU - Martinello, Alessandro

N1 - JEL classification: J26; I12; I20; C26

PY - 2013/10

Y1 - 2013/10

N2 - We assess the validity of differences in eligibility ages for early and old age pension benefits as instruments for estimating the effect of retirement on cognitive functioning. Because differences in eligibility ages across country and gender are correlated with differences in years of schooling, which affect cognitive functioning at old ages, they are invalid as instruments without controlling for schooling. We show by means of simulation and a replication study that unless the model incorporates schooling, the estimated effect of retirement is negatively biased. This explains a large part of the “mental retirement” effects which have recently been found

AB - We assess the validity of differences in eligibility ages for early and old age pension benefits as instruments for estimating the effect of retirement on cognitive functioning. Because differences in eligibility ages across country and gender are correlated with differences in years of schooling, which affect cognitive functioning at old ages, they are invalid as instruments without controlling for schooling. We show by means of simulation and a replication study that unless the model incorporates schooling, the estimated effect of retirement is negatively biased. This explains a large part of the “mental retirement” effects which have recently been found

KW - Faculty of Social Sciences

KW - Cognitive ability

KW - Retirement

KW - Schooling

KW - Cross-country instruments

U2 - 10.1016/j.euroecorev.2013.01.004

DO - 10.1016/j.euroecorev.2013.01.004

M3 - Journal article

SN - 0014-2921

VL - 63

SP - 292

EP - 298

JO - European Economic Review

JF - European Economic Review

ER -