No 'Honeymoon Phase' - Whose Health Benefits from Retirement and When

Gutenberg School of Management and Economics & Research Unit “Interdisciplinary Public Policy” Discussion Paper Series No. 1718

36 Pages Posted: 14 Nov 2017

See all articles by Birgit Leimer

Birgit Leimer

Johannes Gutenberg University Mainz

Date Written: October 25, 2017

Abstract

I use a fixed effects instrumental variable approach to determine the effect retirement has on health. The exogenous variation in the probability to retire at the normal and early retirement age thresholds is exploited to instrument for the otherwise endogenous retirement decision. Six health aspects are considered: self-assessed health, depression, limitations in (instrumental) activities of daily living, mobility limitations, grip strength and number of words recalled. Using data for 10 countries from the Survey of Health, Retirement and Ageing in Europe (SHARE), I find that retiring both at the normal and early retirement eligibility ages significantly improves all health aspects, including the objective measure grip strength. Results do not generally support the theory that previous research was biased towards zero due to behavioral changes during the anticipation phase prior to retirement. Results also do not show the presence of a honeymoon phase directly following the start of retirement, in which individuals are believed to experience a euphoric state leading health improvements. It appears that individuals, especially blue collar workers, go through an adjustment period after retirement in which they experience more health problems, before stabilizing and improving. Overall, retirement has a health preserving effect for both genders and all occupations in the long term. Neither blue collar workers nor workers with physically or psychologically demanding jobs benefit more from retirement than others.

Keywords: retirement, health, honeymoon, retirement phases, SHARE, fixed effects, instrumental variables

JEL Classification: I10, J14, J26

Suggested Citation

Leimer, Birgit, No 'Honeymoon Phase' - Whose Health Benefits from Retirement and When (October 25, 2017). Gutenberg School of Management and Economics & Research Unit “Interdisciplinary Public Policy” Discussion Paper Series No. 1718 . Available at SSRN: https://ssrn.com/abstract=3068654 or http://dx.doi.org/10.2139/ssrn.3068654

Birgit Leimer (Contact Author)

Johannes Gutenberg University Mainz ( email )

Saarstrasse 21
Mainz, D-55099
Germany

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