The Retirement Consumption Puzzle in China

Hongbin Li, Xinzheng Shi and Binzhen Wu ()

American Economic Review, 2015, vol. 105, issue 5, 437-41

Abstract: Using data from China's Urban Household Survey and exploiting China's mandatory retirement policy, we use the regression discontinuity approach to estimate the impact of retirement on household expenditures. Retirement reduces total non-durable expenditures by 20 percent. Among the categories of non-durable expenditures, retirement reduces work-related expenditures and expenditures on food consumed at home but has an insignificant effect on entertainment expenditures. After excluding these three components, retirement does not have an effect on the remaining non-durable expenditures. It suggests that the retirement consumption puzzle might not be a puzzle if a life-cycle model with home production is considered.

JEL-codes: D13 D91 J26 O12 P36 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.p20151007
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Citations: View citations in EconPapers (39)

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