Household Saving and Full Consumption over the Life Cycle
AbstractThis paper extends the standard model of life cycle consumption, saving and labor supply in a number of directions. First, it argues that consumption should be defined as expenditure on household production as well as on market goods, that is, we are interested in life cycle profiles of full consumption. If this is done, several well-known puzzles concerning life cycle consumption behaviour are resolved. Secondly, we stress the importance of the heterogeneity of household behaviour in respect of female labour supply and saving, and provide evidence to show that these are very closely related across households. Finally, we formulate theoretical and empirical models incorporating these ideas and use them to show that policy changes, such as a reduction in the progressivity of income taxation, can have effects that contrast sharply with those suggested in the existing literature.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 280.
Length: 49 pages
Date of creation: Apr 2001
Date of revision:
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Other versions of this item:
- Patricia Apps & Ray Rees, 2001. "Household Saving and Full Consumpyion Over the Life Cycle," CEPR Discussion Papers 428, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
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- Patricia Apps & Ray Rees, 2005. "Gender, Time Use and Public Policy Over the Life Cycle," CEPR Discussion Papers 500, Centre for Economic Policy Research, Research School of Economics, Australian National University.
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