IZA Newsroom

IZA – Institute of Labor Economics

Early retirement makes men live longer

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Does early retirement affect how long people live? In a new IZA Discussion Paper, Hans Bloemen, Stefan Hochguertel and Jochem Zweerink investigate this question by estimating the impact of early retirement on the probability to die within five years. They analyze a temporary reduction of the retirement age for Dutch civil servants of certain birth cohorts. This “natural experiment” helped establish a causal relationship between time of retirement and time of death. The authors indeed find a strong effect on longevity for men. Early retirement decreases their probability to die within five years by 42.3 percent (or by 2.5 percentage points). There seems to be no such effect for women. As the study found significant effects on dying from a stroke, one plausible mechanism may work through the removal of stress‐related factors associated with demanding work.

These findings imply that pension funds also bear a higher longevity risk if workers are induced to retire early. In the Dutch case, the lives of the 2,348 early retirees were extended by an average of 56 days. This translated into roughly 7 million euros in additional retirement benefits. Another implication may be that the rising early retirement eligibility age in many countries could lead to higher mortality among men.

What is the right price of clean air?

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How much are people willing to pay for clean air? Driven by this question, empirical economists have come up with a method to estimate the value of air quality. A new discussion paper by IZA Program Director Olivier Deschenes, Michael Greenstone and Joseph Shapiro suggests that former studies may have underestimated the costs of pollution and thus the value of clean air. The researchers argue that defensive investments against pollution, such as medication purchases, have to be factored in when estimating the value of clean air. Studying the introduction of an important cap-and-trade market, which dramatically reduced summertime ozone, the authors show that not only mortality rates but also pharmaceutical expenditures have decreased subsequently. Moreover, the paper shows that the improvement in air quality generates reductions in pharmaceutical purchases that are as large as the value of the observed reduction in mortality rates. This suggests that the costs of ozone might be substantially larger than previously thought.

How effective is high school mentoring?

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Is it worthwhile paying special attention to high school students from disadvantaged social backgrounds? Núria Rodríguez-Planas put this question to a test by looking at the longer-term impacts of mentoring, educational services, and learning incentives on US high school graduation and post-secondary education enrollment among low-performing high school students. Her answer: “It depends.” The study, published in the American Economic Journal: Applied Economics, shows that while interventions were successful in the short term, the educational results were modest. Moreover, there were no significant effects on employment outcomes – and detrimental effects on engagement in risky behaviors in the long run.

In a complementary IZA Discussion Paper, Rodríguez-Planas unravels some of the mechanisms at play. She finds that interventions were extremely successful among youth with a high risk of drug use as they managed to curb risky behaviors: the high school graduation rate increased by 14 percent and college enrollment by 21 percent. In contrast, the program was unsuccessful among youth with a low risk of drug use as it increased their engagement in risky behaviors (especially while in high school) and had no impact on educational outcomes. The findings suggest that these negative impacts are driven by peer effects.

Lowering the legal drinking age has no detrimental impact on youth

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How does the legal drinking age influence youth behavior? In a new IZA Discussion Paper, Stefan Boes and Steven Stillman answer this question by examining the impact of a reduction in the legal drinking age in New Zealand from 20 to 18. The authors analyze the effects of the policy change on alcohol use as well as related hospitalizations and traffic accidents among teenagers. The main findings of the paper are that lowering the legal drinking age has not led to an increase in alcohol consumption or binge drinking among 15-17 or 18-19 year-olds. While there is a significant relative increase in alcohol-related hospital admission rates for both age groups, the absolute number of affected teenagers is small. The study finds no evidence for an increase in alcohol-related vehicular accidents at the time of the law change for any teenagers. The authors also explain why a commonly used approach to estimate the impact of changes in the legal drinking age may give misleading results. Based on their findings, they support the argument that lowering the legal drinking age does not lead to large increases in detrimental outcomes for youth.

More and more older workers want to increase working hours

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Older workers are becoming increasingly important in the European labor market. Previous research on work preferences suggests that older workers would like to reduce working hours. A new IZA Discussion Paper by David Bell and Alasdair Rutherford finds that this is not true for all them. Using data from the United Kingdom, the authors show that there are significant numbers of older workers who would prefer to increase hours. The share of these workers has been rising, particularly since the start of the recession in 2008. The analysis shows that those who want to work fewer hours are more likely to retire early, while those who want more hours delay their retirement compared to otherwise similar workers.

The findings have important implications for employment policy. They indicate that there might be opportunities within the group of older workers to better match individual working hour preferences by providing some form of exchange between those who wish to work more hours and those who prefer fewer hours. The authors argue that if the present mismatch is due to a malfunctioning of the labor market, government intervention to overcome the mismatch might be justified. Yet, for the success of such a policy, the labor market would have to be sufficiently flexible.

Men like child care at least as much as women do

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In March of 2012, The New York Times (NYT) website ran the headline, “Do Women Like Child Care More than Men?” The article answered this question in the affirmative, basing its conclusions on an academic paper by Rhoads and Rhoads (2012), published in the Journal of Social, Evolutionary, and Cultural Psychology. Yet, this study only focused on university professors, thus a highly selective group.

In a new IZA discussion paper, Rachel Connelly and Jean Kimmel test the hypothesis that women “like” child care more than men in the United States using newly available experienced emotions data coupled with time use data. Their research shows that while both men and women “like” child care giving in the sense that they report higher levels of happiness while engaged in child care giving as compared to other daily activities. In fact, men report even higher happiness scores than women, and this difference remains after the authors control for time spent in the activity and the timing of the activity in day, week and year. Connelly and Kimmel also find that women report being more tired and stressed than men in most child care giving activities.

The authors interpret their results as substantial evidence against the popular notion that women perform more unpaid work in the home – particularly activities related to caring for their own children – because they enjoy these activities more than men. In their view, mistaken information about gendered preferences serves to ameliorate concerns about persistent gender wage and achievement gaps: if mothers earn lower wages because they enjoy their time with children more than fathers, why worry about the resulting wage gap? In addition, to the extent that men also enjoy time spent with their young children, men would also benefit from institutional and policy changes that allow both parents to take active roles in parenting, while maintaining their strong continuous labor force commitment.

New evidence from soccer tournaments: three days of rest are enough

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Professional European soccer players have to play about 50 games each year. In 90 minutes they run up to 14 kilometers. Given these numbers, it seems logical that fitness and fatigue are crucial factors that determine the success of a team. In a new IZA Discussion Paper, Vincenzo Scoppa tests the importance of fatigue for team performance empirically. Scoppa uses data on all the matches played by national teams in all the tournaments of the FIFA World Cup from 1930 to 2010 and the UEFA Euro Cup from 1960 to 2012. Using points gained as well as goals scored and conceded as measures of performance, the study shows that an additional day of rest is important for the team success if the total rest time between games is three days or less. Beyond this threshold, an additional day of rest does not seem to affect fatigue. This insight has important implications for soccer clubs. As some teams play in the UEFA Champions or Europa League during the week, they might have a disadvantage when playing in the national leagues during the weekend. On the other hand, the author shows that under the current structure of major international tournaments such as the World or Euro Cup, there are no relevant effects of enjoying different days of rest on team performance as the periods between the games are quite similar.

How the Great Recession affected domestic violence

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During each global recession of the past decades there have been recurrent suggestions in the media that domestic violence increases with unemployment. All these accounts are based on the same underlying logic that high unemployment could provide the “trigger point” for violent situations in the home. However, from a research perspective, it is far from clear whether unemployment is an overwhelming determinant of domestic violence that many commentators expect it to be, and if so, how unemployment might be associated with domestic violence. A new IZA Discussion Paper by Dan Anderberg, Helmut Rainer, Jonathan Wadsworth and Tanya Wilson develops a simple model that explores how changes in unemployment affect the incidence of domestic violence. In a second step the authors test the predictions of their model using individual level data on domestic violence and unemployment from the UK.

The key theoretical result, confirmed by the empirical estimates, is that an increased risk of male unemployment decreases the incidence of intimate partner violence, while a rising risk of female unemployment increases domestic abuse. The authors explain the intuition for why the effects of male and female unemployment are of opposite signs as follows: When a male with a violent predisposition faces a high unemployment risk, he has an incentive to conceal his true nature since his spouse, given his low expected future earnings, would have a strong incentive to leave him if she were to learn his violent nature. As a consequence, higher male unemployment is associated with a lower risk of male violence. Conversely, when a female faces a high unemployment risk, her low expected future earnings would make her less inclined to leave her partner even if she were to learn that he has a violent nature. Anticipating this, a male with a violent predisposition has no incentive to conceal his true nature. Thus, high female unemployment leads to an elevated risk of intimate partner violence.

The effect of sorority membership on eating disorders

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Eating disorders affect 12-25% of college women. While previous research has established a positive correlation between sorority membership and eating disorders, causality has not yet been proven. A new IZA Discussion Paper by Susan Averett, Sabrina Terrizzi and Yang Wang makes an attempt using data from the American College Health Association. Using various econometric methods, the authors demonstrate that sorority membership leads to insufficient food intake of their members. The authors also show that females who tend to be more resilient to eating disorders are more likely to become a sorority member in the first place. This implies that if sororities were less selective, one would expect to see even more adverse weight-related outcomes.

How the French social assistance increased unemployment

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In the context of very high unemployment in many European countries, an old economic question receives new attention: Do social assistance programs increase unemployment rates by providing disincentives to take up a job? A recent IZA Discussion Paper by Olivier Bargain and Karina Doorley sheds new light on this question by studying the effect of the pre-2009 French social assistance program, the RMI (Revenue Minimum d’Insertion), on labor supply. The authors find that eligibility for this program, which began at age 25 for single people, led to a drop of between 5 and 9 percent in the employment rate of young high school dropouts. In 2009 the RMI was replaced by a new program, the RSA (Revenue de Solidarité Active), which introduced an additional benefit component for the working poor. This in-work benefit is found to restore financial incentives to work and alleviate the inactivity trap for high school dropouts. With this new system, which combines transfers to both jobless and working poor, extending the program to under 25-year-olds does not seem to create any significant disincentive effects to work. This is an important policy finding, given that the European youth is particularly prone to unemployment.