The health consequences of returning to work after retirement: Evidence from a Japanese longitudinal survey

Abstract

Prolonged and active old age provides individuals with more chances to work again after full retirement. Returning to work is an increasingly common form of the retirement process and influences the sustainability of social security systems. Previous studies show a beneficial relationship between returning to work and health; however, little is known about the causal effect of returning to work on health. This study used data from men and women aged 50 and older (11,991 individuals) in the Longitudinal Survey of Middle-aged and Older Adults, conducted annually from 2005 to 2019 in Japan. The effects of three types of labor force transitions (continued work, full retirement, and return to work) on physical and mental health were examined. To obtain the causal effects, an instrumental variable approach was used by exploiting the Japanese pension reform and labor market settings as instruments. Compared with full retirement, returning to work showed significantly worse mental health but no significant difference in physical health. The negative effect of returning to work was pronounced among men, former nonmanual workers, and low-wealth individuals. Contrary to the findings in previous studies, insignificant or detrimental effects of returning to work were found in this study. The rigorous causal analysis adds new evidence to the literature. The findings provide important implications for labor and health policy in aging societies.