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Retirement age, health impacts, Europe


What are the health impacts of retirement? As talk of raising retirement ages in pensions and social security schemes continues around the world, it is important to know both the costs and benefits or the individual as well as the governments' budgets. In this paper we use the Survey of Health, Aging and Retirement in Europe (SHARE) dataset to address this question in a multi-country setting. We use country-specific early and full retirement ages as an instrument for retirement behavior in a regression discontinuity design approach. These statutory retirement ages clearly induce retirement, but are not related to an individual's health.

Exploiting the discontinuities in retirement behavior across countries, we find significant evidence that retirement has a health-preserving effect on overall general health. Our estimate indicates that retirement leads to a 0.35 decrease in the probability of reporting to be in fair, bad, or very bad health, and an almost 1 standard deviation drop in the health index (in the direction of better health). In addition, these results are being driven by retirement at age 65. We find no evidence of a health-preserving effect of retiring at younger ages.


Working Paper WR-588