The Retirement Consumption Puzzle in China
Hongbin Li, Xinzheng Shi, Binzhen Wu
American Economic Review · 2015 · Volume 105 · Issue 5
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.
Keywords
Household Production and Intrahousehold Allocation, Intertemporal Household Choice, Life Cycle Models and Saving, Retirement, Retirement Policies, Microeconomic Analyses of Economic Development, Socialist Institutions and Their Transitions: Consumer Economics, Health, Education and Training: Welfare, Income, Wealth, and Poverty
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