Reference : Mental Retirement and Non-Contributory Pensions for the Elderly Poor in Peru
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Business & economic sciences : Social economics
Mental Retirement and Non-Contributory Pensions for the Elderly Poor in Peru
Olivera Angulo, Javier mailto [University of Luxembourg > Faculty of Language and Literature, Humanities, Arts and Education (FLSHASE) > Integrative Research Unit: Social and Individual Development (INSIDE) >]
Novella, Rafael [Inter-American Development Bank]
KU Leuven
KULeuven Working Papers Series 14.05
[en] Cognition ; Non-Contributory Pensions ; Peru
[en] This paper analyses the effects of retirement on cognitive abilities for the elderly poor on the basis of the “mental retirement” effect that accompanies retirement. Given the recent emergence and expansion of non-contributory pension programs to alleviate poverty in old-age across low and middle income countries, attention should be pay to the potential acceleration of cognitive decline when individuals retire, i.e. when there is a decrease in their engagement on cognitive demanding activities. We use a unique and recent survey of the poor elderly in Peru (ESBAM) which includes a cognitive test and serves as the baseline for a non-contributory pension program. We find a significant negative effect of retirement on cognitive ability after controlling for a number of demographics and objective health measures, and even after applying instrumental variables to deal with the potential endogeneity of retirement.

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