Slowed or Sidelined? The Effect of “Normal” Cognitive Decline on Job Performance Among the Elderly

WP#2015-12

Abstract

This paper examines the relationship between age-related cognitive decline and three potential workplace outcomes: 1) coping with increased job difficulty; 2) shifting to a less cognitively demanding job; and 3) retiring early.  It uses data from the Health and Retirement Study (HRS) and the O*NET database.  Critical components of the analysis are the metric used to measure cognitive decline, inclusion of cognitive reserve as an independent variable, and the use of overlapping 10-year observation windows.  A key limitation is that the study cannot conclusively discern a causal relationship between cognitive decline and workforce exit.

The paper found that:

  • About 10 percent of workers between the ages of 55 and 69 experienced steep cognitive decline over a 10-year period.
  • Workers experiencing steep cognitive decline were more likely to “downshift” to a less demanding job or retire than workers experiencing no cognitive decline.
  • Workers experiencing steep cognitive decline retired significantly earlier than planned, compared to workers who experienced no change in cognitive ability.
  • Workers without cognitive reserves were more likely to exit the workforce and retire earlier than planned, compared to workers with cognitive reserves.

 
The policy implications of the findings are:

  • Cognitive decline might prevent a significant minority of older individuals from working to their planned retirement ages, and thus should be considered when assessing reforms that incent delayed retirement.
  • Policies that support “downshifting” to a cognitively less demanding job might help workers at risk of steep cognitive decline to remain in the labor force.
  • Further research is needed to identify whether workers in specific occupations are more susceptible to age-related decline than others, and whether anything can be done to moderate the effect of age-related decline in work ability.