EconStor >
Institute for Fiscal Studies (IFS), London >
IFS Working Papers, Institute for Fiscal Studies (IFS) >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/47479
  
Title:The retirement consumption puzzle: Evidence from a regression discontinuity approach PDF Logo
Authors:Battistin, Erich
Brugiavini, Agar
Rettore, Enrico
Weber, Guglielmo
Issue Date:2008
Series/Report no.:IFS working papers 08,05
Abstract:In this paper we investigate the size of the consumption drop at retirement in Italy. We use micro data on food and total non-durable household spending covering the period 1993-2004, and evaluate the change in consumption that accompanies retirement by exploiting the exogenous variability in pension eligibility to correct for the endogenous nature of the retirement decision. We take a regression discontinuity approach, and make the identifying assumption that consumption would be the same around the threshold for pension eligibility if individuals would not retire. We check in our data that a non-negligible fraction of individuals retire as soon as they become eligible, and estimate at 9:8% the part of the non-durable consumption drop that is associated with retirement induced by eligibility. We show that such fall is not driven by liquidity problems for the less well off in the population, and can be accounted for by drops in goods that are ork-related expenses or leisure substitutes. However, we also show that retirement induces a significant drop in the number of grown children living with their parents, and this can account for most of the retirement consumption drop.
Subjects:Consumption
Regression Discontinuity Design
Retirement
JEL:D9
E2
Document Type:Working Paper
Appears in Collections:IFS Working Papers, Institute for Fiscal Studies (IFS)

Files in This Item:
File Description SizeFormat
578421895.pdf345.28 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/47479

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.