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Saving and Consumption When Children Move Out

  • Klos, Alexander
  • Rottke, Simon

Based on the German Socio-economic Panel (SOEP), we show that household consumption drops and saving rises significantly within four years after a child moves out of a household. Per capita consumption of parents is approximately leveled up to that of childless peers after all children are gone. We conclude with respect to the adequacy of saving rates that calibrated life-cycle models assuming a smoothing of per capita consumption for parents with children in the household underestimate the wealth needed to smooth consumption in the long run.

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File URL: http://econstor.eu/bitstream/10419/79786/1/VfS_2013_pid_374.pdf
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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79786.

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Date of creation: 2013
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Handle: RePEc:zbw:vfsc13:79786
Contact details of provider: Web page: http://www.socialpolitik.org/
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