MANDATORY RETIREMENT AND THE CONSUMPTION PUZZLE: DISENTANGLING PRICE AND QUANTITY DECLINES

This study investigates changes in household consumption at retirement based on a comprehensive, diary‐based household survey from China. We focus on disentangling price changes from quantity changes at retirement. The mandatory retirement policy in China provides a quasi‐experimental setting for no...

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Bibliographic Details
Published in:Economic inquiry 2017-10, Vol.55 (4), p.1738-1758
Main Authors: Dong, Yingying, Yang, Dennis Tao
Format: Article
Language:English
Subjects:
Analysis
Change agents
Consumer research
Consumption
Consumption (Economics)
Discontinuity
Households
Leisure
Mandatory retirement
Methods
Prices
Quasi-experimental methods
Retirement age
Retirement policies
Shopping
Time use
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Summary:This study investigates changes in household consumption at retirement based on a comprehensive, diary‐based household survey from China. We focus on disentangling price changes from quantity changes at retirement. The mandatory retirement policy in China provides a quasi‐experimental setting for nonparametric identification of the true causal effects of fully anticipated retirement. Using a regression discontinuity design, we find that food expenditure declines at retirement, particularly among the less‐educated group. We further show that this decline is driven by a reduction in prices rather than quantities. These findings, along with a documented increase in shopping time for food upon retirement among the less‐educated households, are consistent with a time allocation model in which education enhances the value of leisure. (JEL J26, C21)
ISSN:0095-2583
1465-7295
DOI:10.1111/ecin.12456