how does delayed retirement affect mortality? - zulkarnain.pdf · and studies to date, even on...

Alice Zulkarnain and Matthew S. Rutledge

Center for Retirement Research at Boston College

20th Annual Meeting of the Retirement Research Consortium

Washington, DC

August 3, 2018

How Does Delayed Retirement

Affect Mortality?

Older Americans are retiring later for a

number of reasons.

• More education;

• Less physically demanding jobs;

• Improved health and longevity;

• Shift from DB to DC pensions; and

• Changing Social Security incentives.

1

This project: how does delayed retirement

affect health and mortality?

• Previous studies have explored the effects of early retirement,

and focused on specific sectors or on older birth cohorts.

• Yet, it is unclear that the relationship is symmetric: the

marginal worker deciding to retire early is likely different than

the worker deciding to delay retirement.

• This study exploits a policy from the Netherlands – the

“Doorwerkbonus” – that incentivized later retirement to study

the causal effect of delayed retirement on mortality.

2

After all, the relationship between retirement

and mortality is unclear.

• Removal of physical strain or stress, and more time for health

investments, could reduce mortality.

• Loss of network, identity, and purpose, less physical exercise,

and increased smoking and drinking could increase mortality.

• The relationship is difficult to establish since work and health

are jointly determined – e.g., healthy people with lower

mortality tend to work longer.

3

And studies to date, even on early

retirement, have provided mixed evidence.

• One recent study, focused on public sector workers, found that

early retirement decreased the five-year mortality rate by

2.6 percentage points (Bloemen, Hochguertel, and Zweerink

2017).

• While another, focused on blue-collar workers, found that

early retirement increased the risk of dying by age 67 by

2.4 percentage points (Kuhn, Wuellrich and Zweimueller

2010).

4

This study uses a Dutch policy to offer new

evidence focused on delayed retirement.

• Dutch policymakers have focused on encouraging later

retirement since the 1990s.

• For example, in the mid-1990s the option of early claiming in

DB pension plans was phased out, and since 2002, regulations

have tightened exit-pathways through DI and UI.

• The focus of this paper is yet another policy targeting later

retirement that was introduced in 2009, the “Doorwerkbonus.”

5

The “Doorwerkbonus” (DWB):

• Provides a bonus for each year worked after age 62 that

depends on age, birth cohort, and income earned.

• Different from the Delayed Retirement Credit because it is

only received while working and does not affect lifetime

benefits.

• The policy was amended in 2012 and then replaced by a

different policy in 2013.

6

This table below shows how the

“Doorwerkbonus” (DWB) is calculated.

Source: Tax and Customs Administration. 2009-2011. The Netherlands.

DWB Bonus Percentages

Year

2009 2010 2011

Birth cohort Age Bonus Age Bonus Age Bonus

1939 70 1 % 71 1 % 72 1 %

1940 69 1 70 1 71 1

1941 68 1 69 1 70 1

1942 67 1 68 1 69 1

1943 66 2 67 1 68 1

1944 65 2 66 2 67 1

1945 64 10 65 2 66 2

1946 63 7 64 10 65 2

1947 62 5 63 7 64 10

1948 - - 62 5 63 7

1949 - - - - 62 5

1950 - - - - - -

Income cap € 54,776 € 55,831 € 56,280

Income floor € 8,860 € 9,041 € 9,209

7

Men and women eligible for the DWB were

more likely to work between ages 62 and 65.

Share of Men Working

by Age and DWB Eligibility, 2008-2011

Share of Women Working

by Age and DWB Eligibility, 2008-2011

Source: Authors’ calculations using non-public microdata from Statistics Netherlands, 2008-2011.

0%

20%

40%

60%

62 63 64 65

2008 (No DWB)

2009-2011 (DWB)

0%

20%

40%

60%

62 63 64 65

2008 (No DWB)

2009-2011 (DWB)

8

Five-year Mortality Rate for Women

Ages 62-65, 1999-2011

0%

2%

4%

6%

8%

10%

1999 2001 2003 2005 2007 2009 2011

Not working

Working


Those working have lower mortality before

and after 2009, with parallel trends before.

0%

2%

4%

6%

8%

10%

1999 2001 2003 2005 2007 2009 2011

Not working

Working

Five-year Mortality Rate for Men

Ages 62-65, 1999-2011

9

The study relies on administrative data

collected by Statistics Netherlands.

• The data contain the entire Dutch population (16.5 million in

2009) and were collected from various administrative sources

e.g., the population registry and tax office.

• The data contain information on labor, income, date of death,

demographics, and prescription drugs.

• These data are linkable by a personal identifier and cover the

period 1999-2016.

10

• 𝐷𝑖,𝑡+5 indicator for whether the person is deceased at t+5.

• 𝑊𝑜𝑟𝑘𝑖𝑛𝑔𝑖,𝑡 indicator for whether person i is working in year t.

• 𝑋𝑖,𝑡 contains income in 1999, demographic characteristics, and

in some models, pension, welfare, DI, and UI benefits.

• 𝐴𝑘 a vector of age-fixed effects, k ranges from ages 51-65.

• 𝑆𝑛 a vector of industry fixed effects.

The project first estimates an OLS regression.

𝐷𝑖,𝑡+5 = 𝛼 + 𝑋𝑖,𝑡′ 𝛽 + 𝛾𝑊𝑜𝑟𝑘𝑖𝑛𝑔𝑖,𝑡 + 𝛿𝑦𝑒𝑎𝑟 + 𝐴𝑘 + 𝑆𝑛 + 휀𝑖,𝑡

11

• First Stage:

𝑊𝑜𝑟𝑘𝑖𝑛𝑔𝑖,𝑡 = 𝜋 + 𝑋𝑖𝑡′ 𝜌 + 𝜆𝐷𝑊𝐵𝑖,𝑡 + 𝜃𝑦𝑒𝑎𝑟 + 𝐴𝑘 + 𝑆𝑛 + 휀𝑖,𝑡

o 𝐷𝑊𝐵𝑖,𝑡 a binary indicator of eligibility for the DWB.

• Second Stage:

𝐷𝑖,𝑡+5 = 𝛼 + 𝑋𝑖,𝑡′ 𝜃 + 𝛿𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑖,𝑡 + 𝜋𝑦𝑒𝑎𝑟 + 𝐴𝑘 + 𝑆𝑛 + 𝜂𝑖,𝑡

o 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑖,𝑡 predicted working status from the first stage.

Since work and health are jointly determined,

the project also estimates a 2SLS regression.

12

13

The OLS results suggest working longer

reduces mortality for both men and women.

OLS Estimates of the Relationship Between Working and the Five-year Mortality Risk

Notes: Sample contains men and women born between 1943 and 1950 observed from 1999 through 2011. For cohorts born between 1943

and 1945, observations after 2009 are not included. All models include controls for marital status, income in 1999, a linear year control, and

age fixed effects. Benefit controls include indicators for whether a person receives a pension, welfare, UI, DI, or other social benefits.

Robust standard errors clustered at the birth cohort – year level in parentheses. *** p<0.01.


Men Women

(1) (2) (3) (4) (5) (6)

Working (0/1) -0.021 *** -0.021 *** -0.019 *** -0.012 *** -0.011 *** -0.008 ***

(0.001) (0.001) (0.000) (0.001) (0.000) (0.000)

Age-fixed effects Yes Yes Yes Yes Yes Yes

Industry-fixed effects No Yes Yes No Yes Yes

Benefit controls No No Yes No No Yes

5-year mortality non-working 2008 7.4 % 7.4 % 7.4 % 4.4 % 4.4 % 4.4 %

5-year mortality working 2008 4.3 4.3 4.3 2.4 2.4 2.4

R2 0.015 0.016 0.019 0.006 0.007 0.009

Observations 10,437,307 10,437,307 10,437,307 10,143,975 10,143,975 10,143,975

13

14

But the 2SLS regression only finds a

significant reduction for men. 2SLS Estimates of the Effect of Working on the Five-year Mortality Risk


and 1945, observations after 2009 are not included. DWB instrument is 1 after 2009 for cohorts born between 1945-1949. All models

include controls for marital status, income in 1999, a linear year control, and age fixed effects. Benefit controls include indicators for

whether a person receives a pension, welfare, UI, DI, or other social benefits. The table reports the Kleibergen-Paap F statistic. Robust

standard errors clustered at the birth cohort – year level in parentheses. * p<0.10, ** p<0.05, *** p<0.01.


Men Women

(1) (2) (3) (4) (5) (6)

-0.015 *** -0.016 *** -0.021 *** 0.090 -0.001 0.004

(0.005) (0.004) (0.005) (0.239) (0.021) (0.016)

Age-fixed effects Yes Yes Yes Yes Yes Yes

Industry-fixed effects No Yes Yes No Yes Yes

Benefit controls No No Yes No No Yes

First stage

F statistic 22 23 23 4 4 6

DWB coefficient 0.056 *** 0.057 *** 0.046 *** 0.011 * 0.011 0.014 **

(0.012) (0.012) (0.010) (0.006) (0.006) (0.006)

R2 0.015 0.016 0.019 0.090 0.006 0.009

Observations 10,437,307 10,437,307 10,437,307 10,143,975 10,143,975 10,143,975

14

15

It is useful to put the 2SLS regression results

into the perspective of extra months of life.

• For men, a 1.6-percentage-point reduction is a 22-percent

reduction relative to the five-year mortality risk of non-

workers in 2008.

• If this 22-percent reduction occurs only between ages 60-64,

then it increases age 60 life expectancy by 2 months.

• Of course, if the effect instead lasted beyond these ages, the

increase in life expectancy would be larger.

15

Conclusion

• The results from this study suggest that working longer may

lead to longer lives, especially for men.

• However, unless the gains are long-lasting, the actual

additional life is predicted to be relatively small.

• Still, policymakers may want to consider the interaction

between mortality and work as people continue to extend their

careers.

16

Next steps

• The project recently gained access to prescription drug data,

which will allow us to investigate the impact of delayed

retirement on health.

• Specifically, the project will study how delayed retirement

affects:

o Diabetes and depression, two health outcomes that clearly

connect to specific prescription drug classes – e.g., anti-

depressants or insulin.

o Overall health as measured by a comorbidity index based

on prescription drug use.

17

Appendix A: Institutional Setting

18

Retirees in the Netherlands can receive

income from three sources.

• Pillar I: Public Pension

o Flat rate, not means tested.

o € 1,000 for singles, € 1,400 for couples.

o Eligible at age 65 (cohorts before 1948).

• Pillar II: Collective (Employer Provided) Pensions.

o 90 percent of employees participate, majority DB plans,

fully funded.

• Pillar III: Private Individual Pension Products.

o Self-employed, and employees in sectors without

collective plan.

o Anyone can purchase a product in the third pillar.

19

Great Recession is less of a concern in the

Netherlands between 2009-2011 than in U.S.

Source: Statistics Netherlands, 2002-2014.

0%

2%

4%

6%

8%

2003 2005 2007 2009 2011 2013

Hu

nd

red

s

Men

Women

Unemployment Rate Ages 45-70, by Gender

20

Appendix B: Descriptive Statistics

21

22

Men who work at ages 62-65 have a lower

mortality risk than those who do not work.

Averages of Characteristics of Men Ages 62-65, by DWB Eligibility


Eligible for DWB Not eligible for DWB

5 year mortality risk 5.6 % 6.1 %

Working 48.1 39.1

Working Not working Working Not working

5 year mortality risk 3.9 % 7.3 % 4.3 % 7.3 %

Married 80.7 74.0 82.5 77.6

Widowed 2.9 3.9 2.9 4.0

Divorced 10.6 12.5 9.7 10.7

Pension recipient 54.3 75.5 56.3 73.5

UI 4.0 5.1 4.3 7.7

DI 0.5 4.9 0.5 4.6

Welfare 4.2 10.7 4.7 11.2

Other social benefits 11.0 30.8 13.7 32.1

22

23

Women do not show the same pattern.

Eligible for DWB Not eligible for DWB

5 year mortality risk 3.8 % 3.9 %

Working 27.3 20.2

Working Not working Working Not working

5 year mortality risk 2.4 % 4.4 % 2.4 % 4.3 %

Married 66.3 72.9 66.7 72.8

Widowed 8.4 10.5 9.8 11.5

Divorced 18.8 11.6 17.9 11.1

Pension recipient 48.7 48.2 50.5 43.3

UI 2.9 1.8 2.9 2.7

DI 1.0 6.2 1.1 6.2

Welfare 1.8 2.9 2.0 3.2

Other social benefits 5.9 17.0 6.7 17.0

Averages of Characteristics of Women Ages 62-65, by DWB Eligibility

Source: Statistics Netherlands. 1999-2016. Microdata.

23

Overview of cohorts in the sample

Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

1943 56 57 58 59 60 61 62 63 64 65

1944 55 56 57 58 59 60 61 62 63 64

1945 54 55 56 57 58 59 60 61 62 63

1946 53 54 55 56 57 58 59 60 61 62 63 64 65

1947 52 53 54 55 56 57 58 59 60 61 62 63 64

1948 51 52 53 54 55 56 57 58 59 60 61 62 63

1949 50 51 52 53 54 55 56 57 58 59 60 61 62

1950 49 50 51 52 53 54 55 56 57 58 59 60 61

Source: Authors’ calculations.

24

Appendix C: Other Robustness Checks

25

26

Eliminating those who were not working at

age 55 does not change the results. 2SLS Estimates of the Effect of Working on the Five-year Mortality Risk for Those Working at Age 56

Notes: Sample contains men and women born between 1943 and 1950 observed from 1999 through 2011 who worked at age 56. For

cohorts born between 1943 and 1945, observations after 2009 are not included. DWB instrument is 1 after 2009 for cohorts born between

1945-1949. All models include controls for marital status, income in 1999, a linear year control, and age fixed effects. Benefit controls

include indicators for whether a person receives a pension, welfare, UI, DI, or other social benefits. The table reports the Kleibergen-Paap F

statistic. Robust standard errors clustered at the birth cohort – year level in parentheses. *** p<0.01.


Working at age 56

-0.017 ***

(0.005)

Age-fixed effects Yes

Industry-fixed effects Yes

Benefit controls No

First stage

F statistic 18.9

DWB coefficient 0.062 ***

(0.014)

Mean mortality risk non-working 6.0 %

Mean mortality risk working 3.3

R2 0.01

Observations 5,077,113

26

27

As would be hoped, no effect is found for a

“placebo” policy. 2SLS Estimates of the Effect of Working on the Five-year Mortality Risk

Notes: Sample in column 1 includes cohorts born between 1940-1946, observed between 1999-2008, but excludes observations after 2006

for the cohorts born between 1940-1942. The placebo DWB indicator is 1 for cohorts born between 1943-1946 after 2006, and 0 for

everyone else. The model include controls for marital status, a linear year control, and age fixed effects. The table reports the Kleibergen-

Paap F statistic. Robust standard errors clustered at the birth cohort – year level in parentheses.


Placebo

0.015

(0.060)

Age-fixed effects Yes

Industry-fixed effects No

Benefit controls No

First stage

F statistic 1.1

DWB coefficient -0.017

(0.045)

Mean mortality risk non-working 7.3 %

Mean mortality risk working 3.5

R2 0.003

Observations 5,749,281

27

28

Leaving out the control for income modestly

increases the size of the effect. 2SLS Estimates of the Effect of Working on Mortality Risk with and without Baseline Income Control


and 1945, observations after 2009 are not included. DWB instrument is 1 after 2009 for cohorts born between 1945-1949. All models

include controls for marital status, a linear year control, and age fixed effects. Benefit controls include indicators for whether a person

receives a pension, welfare, UI, DI, or other social benefits. The table reports the Kleibergen-Paap F statistic. Robust standard errors

clustered at the birth cohort – year level in parentheses. *** p<0.01.


With income control Without income control

-0.016 *** -0.020 ***

(0.001) (0.004)

Age-fixed effects Yes Yes

Industry-fixed effects Yes Yes

Benefit controls No No

First stage

F statistic 23 23

DWB coefficient 0.057 *** 0.063 ***

(0.012) (0.011)

Mean mortality risk non-working 7.0 % 7.0 %

Mean mortality risk working 2.8 2.8

R2 0.015 0.015

Observations 10,437,307 10,437,307

28

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