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. These studies do not account for partial retirement or part-time work. This paper aims to fill this gap. We study how the amount of work hours affects the physical or mental health conditions of US residents between 50 and 75 years old in eight waves (1994-2008) 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 overall health and memory skills. On the other hand, part-time and full-time working reduces body weight, and part-time white-collar work substantially improves the word recall score. Part-time and full-time workers are also less prone to depression. 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.

Keywords: Older workers, phased retirement, health

JEL Classification: C23, C25, C26, I12, J14, J26