Retirement Consumption Puzzle in China

40 Pages Posted: 9 Dec 2012 Last revised: 4 Nov 2013

See all articles by Li Hongbin

Li Hongbin

Tsinghua University

Xinzheng Shi

Tsinghua University - School of Economics & Management

Binzhen Wu

Tsinghua University - School of Economics & Management

Date Written: October 1, 2013

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 non-durable expenditures. Retirement reduces total non-durable expenditures by about 21 percent. Among the categories of non-durable expenditures, retirement reduces the work-related expenditures and the expenditures on food consumed at home but does not has a significant effect on expenditures on entertainment. After excluding work-related expenditures, expenditures on food consumed at home and expenditures on entertainment, retirement does not have a significant effect on the remained non-durable expenditures. The findings suggest that retirement consumption puzzle might not a puzzle if an extended life-cycle model with home production is considered.

Keywords: retirement, comsumption, China

JEL Classification: D12, D60, O53

Suggested Citation

Hongbin, Li and Shi, Xinzheng and Wu, Binzhen, Retirement Consumption Puzzle in China (October 1, 2013). Available at SSRN: https://ssrn.com/abstract=2187005 or http://dx.doi.org/10.2139/ssrn.2187005

Li Hongbin

Tsinghua University ( email )

Beijing, 100084
China

Xinzheng Shi (Contact Author)

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China

Binzhen Wu

Tsinghua University - School of Economics & Management ( email )

School of Economics and Management
Tsinghua University
Beijing, Beijing 100084
China

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