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KMID : 0379220150350020237
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Journal of Korea Gerontological Society
2015 Volume.35 No. 2 p.237 ~ p.254
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The Effect of Retirement on Cognitive Functioning : Difference-in-Difference Analysis Using Propensity Score Matching
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Ha Mi-Ok
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Abstract
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This paper analyses the effect of retirement on cognitive functioning using Korean Longitudinal Study of Aging (KLoSA), a longitudinal survey among older Koreans. In order to control for individual heterogeneity among retirees and non-retirees, the author performs a difference-in-difference analysis using propensity score matching. The result shows that the proportion of retirees experiencing cognitive decline increased by 2.2% after retirement. During that same period, the rate of cognitive decline among non-retirees has increased by 1.4%. However, a simple difference-in-difference analysis implies that retirement has no negative effect on cognitive decline. After controlling for socioeconomic characteristics and health indicators using a panel logistic regression analysis, the author finds that retirement decreases the odds of cognitive decline, although it is not statistically significant. These empirical results indicate that a negative relationship between retirement and cognitive functioning in previous researches may be overestimated. This study suggests a panel data regression analysis with an instrumental variable, which allows to address a reverse causality issue and individual heterogeneity in estimating the impact of retirement on cognitive functioning.
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KEYWORD
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retirement , cognitive function , propensity score matching , difference-in-difference analysis , panel logistic regression analysis
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