Heterogeneous effects of retirement on cognitive decline by occupation

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Date and Time: 
Thursday, November 17, 2016
12:00 pm – 1:00 pm
Abstract: 

The cognitive reserve hypothesis implies that engaging in cognitively stimulating activities reduces cognitive decline at older ages. Hence, the effect of retirement on cognitive decline is expected to vary by the type of job an individual retires from. Individuals who retire from cognitively demanding jobs may on average reduce their mental exercise, whereas individuals who retire from more manual jobs may on average increase it. With mental exercise being protective of cognitive capacity, we hypothesize that retirement affects cognition negatively for workers with cognitively demanding jobs and positively (or less negatively) for workers with cognitively less demanding jobs. We investigate whether we find these predicted patterns in the data, looking not only at number of correct answers but also the time it takes to answer the questions. We also study the sensitivity of the results to the identification strategy, using instrumental variables proposed in the literature. Furthermore, we investigate whether similar relations hold for cognitively demanding leisure activities, as the theory would predict.