The Effect of Retirement on Mental Health: The Role of Social Capital.

Abstract: The purpose of this paper is to empirically evaluate the causal effect of retirement on so-cial capital, and by extension, mental health. Social capital is often divided into different parts. Two common measures are cognitive social capital, for example, ”how people feel” and, structural social capital, for example, what they “do“ in regards to social interaction. To study the effects of retirement on social capital we use data from the Survey of Health, Ageing and Retirement in Europe (SHARE), which contains a social network module. We use the jump in the probability of retiring that arises when a person reaches the statutory retirement age as an IV for retirement, in a fussy regression discontinuity (FRD) design. Our results, which are robust, suggest that retirement has a positive and significant effect on both structural and cognitive social capital. Retirement increases the probability of having activities and attending social clubs. Retirement also decreases the probability and the frequency of feeling left out. We do, however, not find any effect on loneliness.