Premature Decay

Any increase in the retirement age evokes doomsday scenarios. How will the elderly be able to keep working? It's a legitimate question, because for 50 years we had been used to employees retiring at an earlier age than their parents. At the end of the 1960s, Italian males retired at 65 years of age. In the early 1990s the average retirement age declined to 59.5 years, well below the average of 64 for OECD countries. Many studies have highlighted the responsibility of social security systems in causing this mass exodus towards retirement. Over the years, various generations of aging employees were given an early and generous way out of employment, but things are changing now and the average retirement age (for men) has gone up to 61 years of age.

Since it seems that everybody in Italy cannot wait to retire (except for privileged elites who stay in power well into their old age), one could wonder whether working is so bad for old people. Are we sure that retirement is a boon? Some research studies point out that postponing retirement and staying in employment helps maintain functional those cognitive skills that decay with age. After 55 years of age, some capabilities like short-term and long-term memory, ability to communicate and especially analytical capabilities slowly but inexorably decline. In their Survey of Health, Ageing and Retirement in Europe (SHARE), F. Mazzonna and F. Peracchi (2012) show that those who go into early retirement are more exposed to this degenerative process. Why is retirement bad for you? The negative effect could be due to being abruptly cut off from one's main social network. Pensioners tend to reduce their social interactions, which had previously occurred mostly with colleagues at work, who thus helped (somewhat paradoxically, many would think) keep our cognition in shape. Isolation and lack of social contacts and interactions reduce our cognitive skills.

If working longer can be beneficial to employees, one might also ask whether it benefits firms, too. Analytical and mathematical skills start declining already after 35-40 years of age. Fortunately, managerial and communication skills increase until 45 years of age on average and then stay almost constant. So firms could be not averse to employing senior citizens, provided seniority is no longer the main criterion to calculate wage progression. But what about manual workers? A study conducted by A. Börsch-Supan and M. Weiss (2011) investigates workers' productivity at the assembly line of a German car company. Their data show that younger workers tend to make fewer errors than older workers, but workers with higher seniority (more than 50 years of age) make smaller mistakes. It is more often the young who cause bigger damage, thus bringing the assembly line to a halt.

Thus, working until one's old age does not seem counterproductive, and can cease to be a social taboo.