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Early- and later-life stimulation: How retirement shapes the effect of education on old-age cognitive abilities

Author

Listed:
  • Schmitz, Hendrik
  • Westphal, Matthias

Abstract

We study the interaction of education in adolescence and labor force participation around retirement age and its effect on cognitive abilities for individuals in Europe. Besides a direct long-run effect of education, indirect ones may arise, specifically through labor force participation. We suggest an estimator for causal mediation analysis that accommodates endogeneity and heterogeneous treatment effects and use it to identify indirect effects within the education effect. We find that education raises cognitive abilities by about 8 percent. Among the more educated, labor force participation accounts for 36 percent of the total effect, emphasizing important complementarities between education and labor force participation.

Suggested Citation

  • Schmitz, Hendrik & Westphal, Matthias, 2025. "Early- and later-life stimulation: How retirement shapes the effect of education on old-age cognitive abilities," Ruhr Economic Papers 1146, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:315483
    DOI: 10.4419/96973329
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    More about this item

    Keywords

    Cognitive abilities; causal mediation analysis; marginal treatment effects; education;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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