The Impact of Early Retirement on Health

Abstract

This paper investigates the impact of early retirement on the health after retirement. Although the correlation between retirement and mental health is negative, this is not necessarily a causal impact because retirement may be endogenous to health. We address the endogeneity using two sources of exogenous variation in retirement; the first arises because of a reform of the early retirement scheme, and the second is due to an eligibility discontinuity in age. Our results are based on a large Danish administrative dataset for everyone born 1936-42 (N = 376, 909). We measure health outcomes by purchase of different types of prescription medicine and mortality. Our results support prior findings in the literature: early retirement has no effect on the medicine purchase risk in either short or long run.

Keywords: Early Retirement, Objective Health, Administrative Register Data, Reform, Regression Discontinuity Design, Instrumental Variables

JEL Classification: I10, J26