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The retirement-consumption puzzle: a marital bargaining approach

  • Lundberg, Shelly
  • Startza, Richard
  • Stillman, Steven

Evidence from several countries reveals a substantial drop in household consumption around the age of retirement that is difficult to explain with life-cycle models. Using food consumption data from more than 550 households from the Panel Study of Income Dynamics for the years 1979-1986 and 1989-1992, the authors find that married couple households decrease their expenditures on food consumed both at home and away from home by about 8 percent following the retirement of the male household head. This result is robust for several alternative definitions of retirement. No significant decrease in consumption is found for single households, either in a sample of males or a pooled sample of single males and females. These results are consistent with a model of marital bargaining in which wives prefer to save more than their husbands to support an expected longer retirement period, and relative control over household decisions is affected by control over market income.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 87 (2003)
Issue (Month): 5-6 (May)
Pages: 1199-1218

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Handle: RePEc:eee:pubeco:v:87:y:2003:i:5-6:p:1199-1218
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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  1. Chiappori, P.A., 1989. "Collective Labour Supply and Welfare," DELTA Working Papers 89-07, DELTA (Ecole normale supérieure).
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  13. Akerlof, George A, 1991. "Procrastination and Obedience," American Economic Review, American Economic Association, vol. 81(2), pages 1-19, May.
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  17. Euwals, Rob & Börsch-Supan, Axel H. & Eymann, Angelika, 2000. "The Saving Behaviour of Two Person Households: Evidence from Dutch Panel Data," IZA Discussion Papers 238, Institute for the Study of Labor (IZA).
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