Plamen Nikolov
Md Shahadath Hossain

Economists have mainly focused on human capital accumulation, rather than on the causes and consequences of human capital depreciation in late adulthood. To investigate how human capital depreciates over the life cycle, we examine how a newly introduced pension program, the National Rural Pension Scheme, affects cognitive performance in rural China. We find significant adverse effects of access to pension benefits on cognitive functioning among the elderly. We detect the most substantial impact of the program on delayed recall, a cognition measure linked to the onset of dementia. In terms of mechanisms, we find that cognitive deterioration in late adulthood is mediated by a substantial reduction in social engagement, volunteering, and activities fostering mental acuity.

Publication Type
Working Paper
File Description
First version, September, 2022
JEL Codes
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
H55: Social Security and Public Pensions
O15: Economic Development: Human Resources; Human Development; Income Distribution; Migration
life cycle
human capital
cognitive functioning
middle-income countries
developing countries