The impact of retirement on health: Empirical evidence from the change in public pensionable age in Japan

Abstract

The balance between maintaining and enhancing the health, quality of life, and healthy life expectancy of the elderly and their corresponding social costs, including medical and long-term care expenses, is an important policy issue in the context of Japan’s super-aging society. In this paper, we employ individual panel data from the four waves of the Japanese Study of Aging and Retirement to examine how retirement from the labor market affects the health of elderly males. Numerous empirical studies have shown mixed results concerning the causal effect of retirement on health through diverse and complex mechanisms. However, we present several new insights by focusing on the policy change in 2000 of raising the pensionable age for the earnings-related public pension system which completely eliminates pension income after the statutory retirement age for particular cohorts. Our fixed-effects instrumental variable estimation shows that retirement significantly improves oral function and mental health, but it also makes male retirees more susceptible to lifestyle-related diseases. Supplemental results further suggest that a significant increase in dental care utilization would help improve post-retirement oral function.