THE EFFECTS OF RETIREMENT ON INDIVIDUALS’ HEALTH OUTCOMES

This study examines the effect of retirement on the elderly’s health outcomes. The variables assessed are divided into direct health outcomes- allergy, asthma, cholesterol, diabetes, heart diseases, hypertension, accidents suffered, self-reported health status- and intermediate health outcomes- visits to the hospital, visits to the emergencies services, smoking and BMI. To overcome endogeneity concerns, we estimate a cross-sectional IV model. The paper exploits changes on the fiscal incentives faced by individuals at retirement. In particular, the proposed identification strategy has as instruments the implicit tax rate variation across cohorts and skill groups, as well as, the statutory retirement age (65+). The analysis concludes that retirement increases the probability of suffering from asthma and smoking, as well as, the likelihood of having diabetes and of using health care. At the same time, it decreases the probability of hypertension and cholesterol issues. In addition, since those individuals with the lowest education profile are the once experiencing bigger effects, the analysis shows an existing education gradient. We also observe heterogeneous response by gender.