Does the Definition of Retirement Matter in Estimating the Effects of Retirement on Cognitive Functioning?

The purpose of this paper is to examine the causal impact of retirement on the cognitive functioning of male elderly workers using data from three waves of the National Survey of Japanese Elderly (NSJE). We examine how the definition of retirement affects the findings of Kajitani et al. (2013) where they examined the effects of the longest tenure job (career job) on cognitive functioning. Here, we use the status of retirement rather than the duration of retirement. The two step estimator we use takes account of the potential endogeneity of the status of retirement, using the age at which individuals are eligible to start receiving pension benefits and whether their career job was self-employment as instruments. Our empirical evidence suggests that the requirements in a person's career job have statistically significant impacts on the cognitive functioning after retirement. Kajitani et al.'s (2013) findings are found to be robust irrespective of the definition of retirement.