How Does Delayed Retirement Affect Mortality

Older Americans have been retiring later for a number of reasons, including jobs becoming less physically demanding, the shift from defined benefit to defined contribution pensions, and changes in Social Security incentives. But what are the implications of working longer for workers’ mortality? Answering this question is complicated, because work and health are jointly determined – e.g., healthy people with lower mortality tend to work longer. Previous studies looking at the causal effect of work on mortality have found mixed results and have tended to focus on the effects of early retirement on mortality, not delayed retirement. Yet, people deciding whether to retire are likely much different than those deciding to work longer, for example they are likely less healthy. This paper uses administrative data from the Netherlands and exploits a tax policy variation designed to delay retirement to explore the link between work and mortality, in a two-stage-least-squares framework. The 2SLS results suggest that later retirement leads to a reduction in the five-year mortality risk of 1.6 percentage points for men. For women, the effect in the instrumental variable approach is not statistically significant.