Project in detail

Aging, Cognitive Abilities and Retirement

Members of this project:

In this project we examine the question of human capital depreciation at older ages by analyzing the age-related decline in cognitive abilities in conjunction with retirement. In particular, we want to address the question of whether retirement leads to cognitive decline. Following the standard human capital approach we predict a decline in cognitive abilities after retirement due to the fact that individuals have no longer any market incentives motivating them to invest in their cognitive abilities once they have retired. This theoretical prediction has been confirmed by our empirical analysis that uses data from the Survey on Health, Aging and Retirement in Europe (SHARE). An implication of our result is that incentives to early retirement and mandatory retirement rules cause important losses of human capital. This project is a cooperation with Franco Peracchi at Università degli Studi di Roma Tor Vergata. The results of this project have been published in the European Economic Review.

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