Does retirement affect cognitive functioning?

This paper analyzes the effect of retirement on cognitive functioning using two large scale surveys. First, a longitudinal survey among older Americans allows controlling for individual heterogeneity and endogeneity of the retirement decision. Second, a cross-national European survey allows identifying the causal effect of retirement on cognition by using the cross-country differences in the age-pattern of retirement. The results highlight in both cases a significant negative and quantitatively comparable effect. It suggests that promoting labor force participation of older workers could delay cognitive decline, and thus the occurrence of associated impairments at older age.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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