Mandatory Retirement and the Consumption Puzzle: Prices Decline or Quantities Decline?

Yingying Dong and Dennis Yang
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Yingying Dong: University of California, Irvine

No 16-251, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

Abstract: This paper investigates household consumption changes at retirement by utilizing a comprehensive, diary-based household survey from China. The survey contains both consumption quantity and price information, which permits separating quantity changes from price changes. The mandatory retirement policy in China provides a quasi-experimental setting for identification of the true causal effects of fully anticipated retirement. Using regression discontinuity models, we show that food expenditure declines at retirement, particularly among the low-education group, and that the decline is driven by price declines instead of quantity declines. Shopping time for food increases at retirement, consistent with the price and quantity changes.

Keywords: Retirement-consumption puzzle; Manadatory retirement; regression discontinuity; consumption vs. expenditure; time use; home production (search for similar items in EconPapers)
JEL-codes: C21 J26 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-age, nep-cna and nep-tra
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