Year

2016

Series

Upjohn Institute working paper ; 16-251

DOI

10.17848/wp16-251

Abstract

This paper investigates household consumption changes at retirement by utilizing a comprehensive, diary-based household survey from China. The survey contains both consumption quantity and price information, which permits separating quantity changes from price changes. The mandatory retirement policy in China provides a quasi-experimental setting for identification of the true causal effects of fully anticipated retirement. Using regression discontinuity models, we show that food expenditure declines at retirement, particularly among the low-education group, and that the decline is driven by price declines instead of quantity declines. Shopping time for food increases at retirement, consistent with the price and quantity changes.

Issue Date

February 2016

Sponsorship

W.E. Upjohn Institute for Employment Research, Early Career Research Award grant 13-141-01

Subject Areas

LABOR MARKET ISSUES; Retirement and pensions

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Citation

Dong, Yingying, and Dennis Yang. 2016. "Mandatory Retirement and the Consumption Puzzle: Prices Decline or Quantities Decline?" Upjohn Institute Working Paper 16-251. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research. http://dx.doi.org/10.17848/wp16-251