Early Retirement: Bad For Your Health?
Retirement ages have been trending up, as governments struggle to deal with escalating financial burdens. That might be sad news for would-be retirees — but maybe they’ll change their mind if they look at this new research from Andreas Kuhn, Jean-Philippe Wuellrich, and Josef Zweimüller. They examine the effects of early retirement on a sample of Austrian blue-collar workers:
We find that a reduction in the retirement age causes a significant increase in the risk of premature death – defined as death before age 67 – for males but not for females. The effect for males is not only statistically significant but also quantitatively important. According to our estimates, one additional year of early retirement causes an increase in the risk of premature death of 2.4 percentage points (a relative increase of about 13.4%; or 1.8 months in terms of years of life lost). In line with expectations, we find that IV estimates are considerably smaller than the simple OLS estimates, both for men and for women. This is consistent with negative health selection into retirement and underlines the importance of a proper identification strategy when estimating the causal impact of early retirement on mortality. Our results also indicate that the causal effect of early retirement on mortality for females is zero, suggesting that the negative association between retirement age and mortality in the raw data is entirely due to negative health selection. There are several reasons why male but not female blue-collar workers suffer from higher mortality (eg women may be more health-conscious and adopt less unhealthy behaviours than men; they may be more active after permanently exiting the labour market due to their higher involvement in household activities).
The authors trace the effect to negative behavioral changes associated with early retirement and conclude that “32.4% of the causal retirement effect can be directly attributed to smoking and excessive alcohol consumption.”