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Consumer Expenditures and Home Production at Retirement: New Evidence from Germany

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  • Lührmann, Melanie

    () (Sonderforschungsbereich 504)

Abstract

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.

Suggested Citation

  • Lührmann, Melanie, 2007. "Consumer Expenditures and Home Production at Retirement: New Evidence from Germany," Sonderforschungsbereich 504 Publications 07-13, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  • Handle: RePEc:xrs:sfbmaa:07-13 Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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    References listed on IDEAS

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    Cited by:

    1. Peine, Alexander & Rollwagen, Ingo & Neven, Louis, 2014. "The rise of the “innosumer”—Rethinking older technology users," Technological Forecasting and Social Change, Elsevier, pages 199-214.
    2. Nivorozhkina, Ludmila & Nivorozhkin, Anton & Abazieva, Kamilla, 2010. "Drop in consumption associated with retirement. The regression discontinuity design approach," Applied Econometrics, Publishing House "SINERGIA PRESS", pages 112-126.
    3. Martin Browning & Thomas F. Crossley & Melanie Lührmann, 2016. "Durable Purchases over the Later Life Cycle," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, pages 145-169.
    4. Peine & Ingo Rollwagen & Louis Neven, 2012. "Exploring new patterns of user involvement – baby boomers and the future of consumption," Innovation Studies Utrecht (ISU) working paper series 12-09, Utrecht University, Department of Innovation Studies, revised Sep 2012.
    5. Velarde, Melanie & Herrmann, Roland, 2014. "Time use for consumption and household production of food: is there a retirement-consumption puzzle in Germany?," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182829, European Association of Agricultural Economists.
    6. Blundell, R. & Browning, M. & Cherchye, L.J.H. & Crawford, I. & de Rock, B. & Vermeulen, F.M.P., 2012. "Sharp for SARP : Nonparametric Bounds on the Behavioural and Welfare Effects of Price Changes," Discussion Paper 2012-065, Tilburg University, Center for Economic Research.
    7. Sule Alan & Thomas Crossley & Hamish Low, 2012. "Saving on a rainy day, borrowing for a rainy day," IFS Working Papers W12/11, Institute for Fiscal Studies.
    8. Emanuele Ciani, 2016. "Retirement, pension eligibility and home production," Temi di discussione (Economic working papers) 1056, Bank of Italy, Economic Research and International Relations Area.
    9. Ciani, Emanuele, 2016. "Retirement, pension eligibility and home production," Labour Economics, Elsevier, pages 106-120.

    More about this item

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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