Working Paper: NBER ID: w25229
Authors: Pter Hudomiet; Michael D. Hurd; Susann Rohwedder; Robert J. Willis
Abstract: Physical and cognitive abilities of older workers decline with age, which can cause a mismatch between abilities and job demands, potentially leading to early retirement. We link longitudinal Health and Retirement Study data to O*NET occupational characteristics to estimate to what extent changes in workers’ physical and cognitive resources change their work-limiting health problems, mental health, subjective probabilities of retirement, and labor market status. While we find that physical and cognitive decline strongly predict all outcomes, only the interaction between large-muscle resources and job demands is statistically significant, implying a strong mismatch at older ages in jobs requiring large-muscle strength. The effects of declines in fine motor skills and cognition are not statistically different across differing occupational job demands.
Keywords: Physical decline; Cognitive decline; Job mismatch; Retirement; Labor force participation
JEL Codes: J26; J81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| declines in physical resources (Q32) | work-limiting health problems (I12) |
| declines in physical resources (Q32) | depressive symptoms (D91) |
| declines in physical resources (Q32) | subjective probability of working full-time after age 65 (J26) |
| interaction between large muscle problems and dynamic strength job demands (J28) | retirement outcomes (J26) |
| declines in fine motor skills and cognition (J14) | retirement outcomes (J26) |
| physical decline (I12) | retirement-related outcomes (J26) |