Association for Public Policy Analysis & Management

In recent times, China has experienced a considerable number of its elderly population engaging in late-life employment as a result of economic necessity or merely due to personal preference. The prolonged working lives of the elderly have raised urgent concerns among policy makers and researchers regarding the social, economic and psychological effects on both the elderly and the country at large. This study probes into the psychological effect, specifically the effect of late-life employment on the life satisfaction of the elderly with data from the 2015 China Health and Retirement Longitudinal Survey. To clearly understand the dynamics of this effect, the study further investigates whether the effect varies across residence status and reliant on household income levels, gender and age groups.Using the propensity score matching method, we control selection bias and confoundedness, which may affect the decision to engage in late-life employment. The empirical results indicate that whiles the overall effect of late-life employment on life satisfaction of the elderly is negative, urban elderly associate positive life satisfaction with late-life employment compared to rural elderly who are affected adversely by working during old age. These findings also vary across gender, age and household income levels. Consequent to our findings, this paper further assesses the implications for future policy action.