Abstract:
We study the evolution of consumption expenditure and its distribution over the life-cycle. We estimate age and cohort effects relying on household-level consumption survey data, reaching several conclusions. First, we find significant differences in durable and nondurable life-cycle consumption profiles. While the former remains relatively stable until middle age and decreases afterward, the latter displays a hump-shaped profile. Second, only a few subclasses of nondurable consumption exhibit hump-shaped profiles. This group includes work-related subclasses such as clothing and personal care, food away, and transport. Third, we find that inequality in durable and nondurable consumption increases sharply around middle age.
