The retirement consumption puzzle revisited: Evidence from the mandatory retirement policy in China |
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Institution: | 1. Globalisation and Economic Policy Centre (GEP), University of Nottingham, Nottingham, NG7 2RD, United Kingdom;2. School of Economics, University of Nottingham, Nottingham, NG7 2RD, United Kingdom;3. Centre for the Study of African Economies (CSAE), University of Oxford, Oxford, OX1 3UQ, United Kingdom;4. Hull University Business School, Hull, HU6 7RX, United Kingdom;5. CESifo, Poschingerstr 5, 81679 München, Germany |
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Abstract: | Using data from China's Urban Household Survey and exploiting China's mandatory retirement policy, we use the regression discontinuity approach to estimate the impact of retirement on household expenditures. Retirement reduces total non-durable expenditures by 19%. Among the categories of non-durable expenditures, retirement reduces work-related expenditures and expenditures on food consumed at home but has an insignificant effect on expenditures on entertainment. After excluding these three components, retirement does not have an effect on the remaining non-durable expenditures. It suggests that the retirement consumption puzzle might not be a puzzle if an extended life-cycle model with home production is considered. |
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