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Mandatory Retirement and the Consumption Puzzle: Prices Decline or Quantities Decline?

Author

Listed:
  • Yingying Dong

    (University of California, Irvine)

  • Dennis Yang

    (University of Virginia)

Abstract

This paper investigates household consumption changes at retirement by utilizing a comprehensive, diary-based household survey from China. The survey contains both consumption quantity and price information, which permits separating quantity changes from price changes. The mandatory retirement policy in China provides a quasi-experimental setting for identification of the true causal effects of fully anticipated retirement. Using regression discontinuity models, we show that food expenditure declines at retirement, particularly among the low-education group, and that the decline is driven by price declines instead of quantity declines. Shopping time for food increases at retirement, consistent with the price and quantity changes.

Suggested Citation

  • Yingying Dong & Dennis Yang, 2016. "Mandatory Retirement and the Consumption Puzzle: Prices Decline or Quantities Decline?," Upjohn Working Papers 16-251, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:16-251
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    References listed on IDEAS

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    More about this item

    Keywords

    Retirement-consumption puzzle; Manadatory retirement; regression discontinuity; consumption vs. expenditure; time use; home production;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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