Does consumption decline at retirement?
Beznoska, Martin ;  Steiner, Viktor ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleDoes consumption decline at retirement?
SubtitleEvidence from repeated cross-section data for Germany
AuthorBeznoska, Martin
AuthorSteiner, Viktor
InstitutionUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages24 S.
Series Discussion paper / School of Business & Economics ; 2012/14 : Economics
KeywordsRetirement consumption puzzle; life-cycle hypothesis; wealth effects; repeated cross-section data
Classification (DDC)330 Economics
AbstractThe life-cycle hypothesis implies that consumption would not decline at retirement.
However, several studies found relevant declines in food consumption after retirement for
the United States. Others concluded that this contradiction of the life-cycle hypothesis is
solved by allowing for broader measures of consumption than food. Using repeated crosssection data for Germany, this paper analyzes the retirement consumption puzzle for the German case. For our broadest consumption measure, which includes the flow of durables’ consumption, we find, on average, no significant consumption decline at retirement. This also holds if the potential endogeneity of indidual retirement is controlled for in instrumental variable regressions. We also find heterogeneity in retirement effects among birth cohorts, the level of household wealth, and the level of consumption, but these effects do not support the hypothesis that retirement is associated with a strong reduction of consumption among poorer households.
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FU DepartmentDepartment Business and Economics
Other affiliation(s)Volkswirtschaftslehre
Year of publication2012
Type of documentBook
Terms of use/Rights Nutzungsbedingungen
Created at2012-06-20 : 01:07:12
Last changed2014-01-23 : 04:20:21
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000013825