The Relationship between Retirement and Household Consumption (in Korean)

Jaeho Yun () and Hyun-Jeong Kim ()
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Jaeho Yun: Financial Economics Team, Economic Research Institute, The Bank of Korea
Hyun-Jeong Kim: Macroeconomics Team, Economic Research Institute, The Bank of Korea

Economic Analysis (Quarterly), 2011, vol. 17, issue 1, 1-44

Abstract: This paper studies the relationship between retirement and household consumption, both by net wealth quartiles and by consumption items, using the treatment-effect method. We employ the Korea Labor and Income Panel Study (KLIPS) data set. In particular, we investigate whether the so-called “consumption-retirement puzzle,†which means the discontinuous decrease in consumption around the time of retirement, occurs in Korea. Our analysis shows that retirement reduces household consumption by 9%. By net wealth quartiles, households in the 1st quartile (the poorest group) are most severely affected by retirement with 17% decrease in consumption after retirement. However, households in other wealthier quartiles do not experience a significant change in consumption. By consumption items, there is a significant decrease in job-related expenditure after retirement, such as car maintenance costs, clothing expenses, and public transportation expenses.

Keywords: Retirement; Household Consumption; Consumption-retirement Puzzle; Treatment Effect; the Korea Labor and Income Panel Study (KLIPS) (search for similar items in EconPapers)
JEL-codes: C21 D11 D21 J14 J26 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:bok:journl:v:17:y:2011:i:1:p:1-44

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