Ageing, Cognitive Abilities and Retirement

Einaudi Institute for Economic and Finance (EIEF) Working Paper No. 1015

37 Pages Posted: 14 Feb 2012

See all articles by Fabrizio Mazzonna

Fabrizio Mazzonna

Insitute of Economics (IdEP), Università della Svizzera Italiana; Munich Center for the Economics of Ageing (MEA)

Franco Peracchi

University of Rome Tor Vergata - Department of Economics and Finance; Einaudi Institute for Economics and Finance (EIEF)

Date Written: January 12, 2010

Abstract

We investigate the relationship between ageing, cognitive abilities and retirement using the Survey on Health, Ageing and Retirement in Europe (SHARE), a household panel that offers the possibility of comparing several European countries using nationally representative samples of the population aged 50. The human capital framework suggests that retirement may cause an increase in cognitive decline, since after retirement individuals lose the market incentive to invest in cognitive repair activities. Our empirical results, based on an instrumental variable strategy to deal with the potential endogeneity of retirement, confirm this key prediction. They also indicate that education plays a fundamental role in explaining heterogeneity in the level of cognitive abilities.

Keywords: ageing, cognitive abilities, retirement, education, SHARE

JEL Classification: J14, J24

Suggested Citation

Mazzonna, Fabrizio and Peracchi, Franco, Ageing, Cognitive Abilities and Retirement (January 12, 2010). Einaudi Institute for Economic and Finance (EIEF) Working Paper No. 1015, Available at SSRN: https://ssrn.com/abstract=2004289 or http://dx.doi.org/10.2139/ssrn.2004289

Fabrizio Mazzonna (Contact Author)

Insitute of Economics (IdEP), Università della Svizzera Italiana ( email )

Lugano

Munich Center for the Economics of Ageing (MEA) ( email )

Amalienstraße 33
München, 80799
Germany

Franco Peracchi

University of Rome Tor Vergata - Department of Economics and Finance ( email )

Via di Tor Vergata
Rome, Lazio 00133
Italy

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Due Macelli, 73
Rome, 00187
Italy

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