This paper investigates consumer expenditures of German households pre- and post-retirement. The widely observed distinct drop in spending upon retirement entry poses an empirical puzzle since life cycle theory predicts smoothing of the marginal utility of consumption over time. As one explanation, I explore the role of home production as a substitute for consumer expenses. Taking a combined look at consumer expenditures and time use pre and post-retirement, I find a significant drop of about 17% of pre-retirement expenses at retirement which coincides with an increase in time spent on home production of an additional 33% per day.
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Paper provided by Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim in its series MEA discussion paper series with number
07120.
Length: Date of creation: 02 Apr 2007 Date of revision: Handle: RePEc:mea:meawpa:07120
Contact details of provider: Postal: MEA - Mannheimer Forschungsinstitut Ökonomie und Demographischer Wandel, L13, 17, University of Mannheim, 68131 Mannheim Phone: +49/621/181.1862 Fax: +49/621/181.1863 Web page: http://www.mea.uni-mannheim.de/
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