Consumer Expenditures and Home Production at Retirement – New Evidence from Germany |
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Authors: | Melanie Lührmann |
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Institution: | Centre for Microdata Methods and Practice, and Institute for Fiscal Studies |
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Abstract: | 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 89 minutes per day, accounting for 21% of average home production. |
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Keywords: | D12 D13 D91 J26 Consumer demand time use retirement life cycle model |
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