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

Listed author(s):
  • Li, Hongbin
  • Shi, Xinzheng
  • Wu, Binzhen

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.

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File URL: http://www.sciencedirect.com/science/article/pii/S0147596715000566
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Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 44 (2016)
Issue (Month): 3 ()
Pages: 623-637

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Handle: RePEc:eee:jcecon:v:44:y:2016:i:3:p:623-637
DOI: 10.1016/j.jce.2015.06.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622864

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