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The retirement consumption puzzle revisited: Evidence from the mandatory retirement policy in China

Hongbin Li, Xinzheng Shi () and Binzhen Wu ()

Journal of Comparative Economics, 2016, vol. 44, issue 3, 623-637

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 19%. 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 expenditures on entertainment. 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 an extended life-cycle model with home production is considered.

Keywords: Retirement; Consumption puzzle; China (search for similar items in EconPapers)
JEL-codes: D12 J14 O53 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:eee:jcecon:v:44:y:2016:i:3:p:623-637