Retirement is a major life-cycle shock. China offers an interesting environment to study ageing issues, but studies on retirement effects among China’s aging population are almost absent in the literature.Using CHARLS 2011 and 2013 wave data, this study adopts afuzzy regression continuity (RD) design and “eligible for mandatory retirement age” as an instrumental variable (IV) to establish causal effects of retirement on multiple mental health outcomes, including cognitive functioning, life satisfaction and depression, among Chinese wage-earning urban individuals. Results indicate that retirement has significant negative effects on life satisfaction among men, predominantly those with low SES. Retirement is not found to have an immediate effect on cognitive abilities. However, la...[ Read more ]

Retirement is a major life-cycle shock. China offers an interesting environment to study ageing issues, but studies on retirement effects among China’s aging population are almost absent in the literature.Using CHARLS 2011 and 2013 wave data, this study adopts afuzzy regression continuity (RD) design and “eligible for mandatory retirement age” as an instrumental variable (IV) to establish causal effects of retirement on multiple mental health outcomes, including cognitive functioning, life satisfaction and depression, among Chinese wage-earning urban individuals. Results indicate that retirement has significant negative effects on life satisfaction among men, predominantly those with low SES. Retirement is not found to have an immediate effect on cognitive abilities. However, lagged retirement status has significant negative effects on episodic memory for women, suggesting that retirement may have gradual effects on cognitive abilities. The magnitudes of the coefficients for actual working status are larger than those for formal retirement status, indicating that the actual labor supply decision matters more for mental health than administrative retirement.

Keywords:retirement, cognitive functioning, life satisfaction, regression discontinuity