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Household Consumption at Retirement: A Regression Discontinuity Study on French

Earlier literature has investigated the drop in household consumption upon retirement of the head of the household, the so-called “retirement consumption puzzle”. Here, we expand on these studies by considering also retirement of the wife, thus distinguishing households in which the wife is a “housewife” from ‘dual-earners’. We use a regression discontinuity approach to estimate the effect of each partner's retirement on household consumption. We use for the analysis data drawn from the French Consumer Budget Survey 2001 that collected two-week expenditure diaries. We find a significant and sizable drop in food and clothes expenditure upon retirement of the male partner. However, the drop in food expenditure is not robust to specification checks and it becomes statistically insignificant when dropping from the sample couples in which the wife is a housewife.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 13072.

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Length: 35 pages
Date of creation: Oct 2013
Date of revision:
Handle: RePEc:mse:cesdoc:13072
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  1. Michael D. Hurd & Susann Rohwedder, 2008. "The Retirement Consumption Puzzle: Actual Spending Change in Panel Data," NBER Working Papers 13929, National Bureau of Economic Research, Inc.
  2. David Card & Carlos Dobkin & Nicole Maestas, 2009. "Does Medicare Save Lives?," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 597-636, May.
  3. David Card & Carlos Dobkin & Nicole Maestas, 2004. "The Impact of Nearly Universal Insurance Coverage on Health Care Utilization and Health: Evidence from Medicare," NBER Working Papers 10365, National Bureau of Economic Research, Inc.
  4. Daniel S. Hamermesh, 1982. "Consumption During Retirement: The Missing Link in the Life Cycle," NBER Working Papers 0930, National Bureau of Economic Research, Inc.
  5. Benoit Rapoport & Catherine Sofer & Anne Solaz, 2011. "Household Production in a Collective Model: Some New Results," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00687274, HAL.
  6. Didier Blanchet & Louis-Paul Pele, 1999. "Social Security and Retirement in France," NBER Chapters, in: Social Security and Retirement around the World, pages 101-133 National Bureau of Economic Research, Inc.
  7. Catherine Sofer & Sayyid Salman Rizavi, 2009. "Women's relative position and the division of household work: A study of French couples," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00687280, HAL.
  8. Stewart, Jay, 2009. "Tobit or Not Tobit?," IZA Discussion Papers 4588, Institute for the Study of Labor (IZA).
  9. Lundberg, Shelly & Startza, Richard & Stillman, Steven, 2003. "The retirement-consumption puzzle: a marital bargaining approach," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1199-1218, May.
  10. Patricia Apps & Ray Rees, 2010. "Family labor supply, taxation and saving in an imperfect capital market," Review of Economics of the Household, Springer, vol. 8(3), pages 297-323, September.
  11. Mark Aguiar & Erik Hurst, 2013. "Deconstructing Life Cycle Expenditure," Journal of Political Economy, University of Chicago Press, vol. 121(3), pages 437 - 492.
  12. Johnathan Fisher & David S. Johnson & Joseph Marchand & Timothy M. Smeeding & Barbara Boyle Torrey, 2005. "The Retirement Consumption Conundrum: Evidence from a Consumption Survey," Working Papers, Center for Retirement Research at Boston College wp2005-14, Center for Retirement Research, revised Dec 2005.
  13. Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Technical Working Papers 0337, National Bureau of Economic Research, Inc.
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  15. Emmanuel Duguet & Véronique Simonnet, 2007. "Labor market participation in France: an asymptotic least squares analysis of couples’ decisions," Review of Economics of the Household, Springer, vol. 5(2), pages 159-179, June.
  16. Mark Aguiar & Erik Hurst, 2005. "Lifecycle Prices and Production," NBER Working Papers 11601, National Bureau of Economic Research, Inc.
  17. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
  18. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
  19. Jean-Olivier Hairault & Francois Langot & Thepthida Sopraseuth, 2010. "Distance to Retirement and Older Workers' Employment: The Case for Delaying the Retirement Age," Journal of the European Economic Association, MIT Press, vol. 8(5), pages 1034-1076, 09.
  20. Wilbert van der Klaauw, 2008. "Regression-Discontinuity Analysis: A Survey of Recent Developments in Economics," LABOUR, CEIS, vol. 22(2), pages 219-245, 06.
  21. Raffaele Miniaci & Chiara Monfardini & Guglielmo Weber, 2010. "How does consumption change upon retirement?," Empirical Economics, Springer, vol. 38(2), pages 257-280, April.
  22. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-45, July.
  23. Alan L. Gustman & Thomas Steinmeier, 2009. "Integrating Retirement Models," NBER Working Papers 15607, National Bureau of Economic Research, Inc.
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