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June 23, 2017

Cluster-Seminar Public Finances and Living Conditions

Retirement and social connection in old age


June 23, 2017
11:30 - 12:30


DIW Berlin im Quartier 110
Room 3.3.002C
Mohrenstraße 58
10117 Berlin


Anna Hammerschmid

Facing an aging population, many societies discuss policies to prolong work lives. At the individual level, such policies could affect social connectedness in several ways. On the one hand, prolonged work lives could promote a healthier social life at advanced ages by maintaining job-related networks for longer. On the other hand, retirement might boost quantity and quality of social networks by an increase in leisure time. This paper sheds light on the net effects of retirement on social wellbeing and the elderly’s social networks with a particular focus on heterogeneity patterns. Using data from SHARE, we analyze whether country, gender, or education are important dimensions of heterogeneity. Potential endogeneity of the individual retirement status is accounted for using an instrumental variables approach. We thereby exploit variation in the individual retirement decision that is induced by pensionable age thresholds. The results suggest that retirement is not an important determinant for social connectedness. Moreover, effect heterogeneity is not particularly pronounced in the dimensions under study.