TO WORK OR NOT TO WORK: THE EFFECT OF PENSION REFORMS ON MALE WORKERS’ HEALTH

• Published in: Innovation in aging Vol. 1; no. suppl_1; p. 989
• Main Authors: Ardito, C., Leombruni, R., d’Errico, A., Blane, D.
• Format: Journal Article
• Language: English
• Published: US Oxford University Press 01.07.2017
• Subjects: Abstracts
• ISSN: 2399-5300; 2399-5300
• DOI: 10.1093/geroni/igx004.3575

To mitigate the negative effects of ageing population and low labour market participation on economic development, most of the industrialized countries have reformed their pension systems by increasing the age at which workers become eligible for retirement. This paper investigates the health consequences of the extension of working life on a large sample of Italian men with high labour market attachment during their working life (N=50,143). We focused on the incidence of cardiovascular diseases (CVD) and all-cause mortality, two health outcomes for which there is still contrasting evidence in literature. The problem of endogeneity of retirement is addressed by adopting an Instrumental Variable identification strategy, which exploits the exogenous changes in pension rules, in a quasi-natural experiment set-up. The analysis is performed using WHIP-HEALTH, a longitudinal administrative database that combines social security records on working histories with hospitalization data. Results showed a significant detrimental effect of extended working life. A one-year delay in retirement increased the incidence of CVD hospitalization and all-cause mortality at 68–70 years old by 2.1 and 2.6 percentage points respectively (p<0.01). The health risk associated with postponed retirement was heterogeneous, as manual collar workers, lower income earners and those who had longer careers suffered the highest price of being obliged to stay longer at work. The tests for instruments’ validity showed very good performance in terms of both relevance and exogeneity. This pension reform contributed unintentionally to increased health inequalities, by neglecting the differential vulnerability of individuals to work life extension.