The Effects of Partial Retirement on Health

Abstract

Recent studies analyzed the effect of retirement on mental and physical health. Some of them find that retirement yields a loss in cognitive skills while others find that retirement preserves physical health. When analysing the effect of retirement against work activity, these studies do not distinguish between part-time and full-time work activity. We study how the amount of work hours affects the physical and mental health conditions of US residents between 50 and 75 years old in eleven waves (1992-2012) of the Health and Retirement Study. To avoid the potential bias due to the fact that deteriorating health conditions can cause employees to work fewer hours, retirement eligibility ages are used as instruments for part-time or full-time work decisions. We also control for, possibly health related, unobserved heterogeneity across individuals. We find that working part-time or full-time deteriorates self-reported health and memory. On the other hand, part-time and full-time working reduces body weight, and full-time working improves the word recall score. In general, health status of the elderly responds to working part-time much more than it responds to working full-time, suggesting that the effect of number of hours worked on health outcomes is nonlinear.