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The impact of automatic enrolment on the mental health gap in pension participation: evidence from the UK

Arulsamy, Karen and Delaney, Liam (2022) The impact of automatic enrolment on the mental health gap in pension participation: evidence from the UK. Journal of Health Economics, 86. ISSN 0167-6296

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Identification Number: 10.1016/j.jhealeco.2022.102673

Abstract

A large body of evidence shows that individuals with poor mental health have lower income over the lifespan but a dearth of evidence exists on how poor mental health affects savings behaviour. In this paper, we provide novel evidence of a mental health gap in pension participation in the UK using nationally representative longitudinal data from Understanding Society (UKHLS). Beginning in 2012, the UK government introduced automatic enrolment enabling us to assess the impact of one of the largest pension policy reforms in the world on this mental health gap. We measure mental health using the General Health Questionnaire (GHQ-12) which is a commonly used tool for measuring psychological distress. Prior to automatic enrolment, we find that male private sector employees with poor mental health are 3.7 percentage points less likely to participate in a workplace pension scheme while female private sector employees with poor mental health are 2.9 percentage points less likely to participate after controlling for key observables including age, education, race, marital status, number of children, occupation type, industry type, presence of a physical health condition and cognitive ability. The implementation of automatic enrolment removes the mental health gap in pension participation, equalising the pension participation rates of individuals with and without poor mental health in the private sector.

Item Type: Article
Official URL: https://www.sciencedirect.com/journal/journal-of-h...
Additional Information: © 2022 The Author(s)
Divisions: Psychological and Behavioural Science
Subjects: B Philosophy. Psychology. Religion > BF Psychology
H Social Sciences > HC Economic History and Conditions
JEL classification: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J32 - Nonwage Labor Costs and Benefits; Private Pensions
D - Microeconomics > D9 - Intertemporal Choice and Growth > D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
Date Deposited: 10 Nov 2022 12:15
Last Modified: 16 Nov 2022 13:21
URI: http://eprints.lse.ac.uk/id/eprint/117274

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