The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach

Erich Battistin, Agar Brugiavini, Enrico Rettore and Guglielmo Weber

American Economic Review, 2009, vol. 99, issue 5, 2209-26

Abstract: We investigate the size of the consumption drop at retirement in Italy by exploiting pension eligibility information to correct for endogenous retirement. We take a regression discontinuity approach and assume that spending would be smooth around pension eligibility if individuals did not retire. We estimate a 9.8 percent drop associated to retirement. This fall is not driven by liquidity problems for the less well off and can be accounted for by drops in work-related expenses. Retirement also induces a significant drop in the number of grown children living with their parents and this explains most of the retirement consumption drop. (JEL D91, E21, J26, J31)

JEL-codes: D91 E21 J26 J32 (search for similar items in EconPapers)
Date: 2009
Note: DOI: 10.1257/aer.99.5.2209
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Citations: View citations in EconPapers (224)

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Related works:
Working Paper: The retirement consumption puzzle: evidence from a regression discontinuity approach (2008)
Working Paper: The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach (2007)
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