Intertemporal and intratemporal consumption smoothing at retirement: micro evidence from detailed spending and time use data

Abstract

Using detailed spending and time use data from the Netherlands, this paper analyzes the causal effect of retirement on spending and time use decisions. Both total consumption and disaggregated consumption categories are considered. We do not find empirical evidence for drops in households' total non-durable spending at retirement. Our estimates suggest increases in spending at retirement on goods that are complementary to leisure, but no decreases in spending on goods that are replaceable by home production. The quantitative implication of our empirical results for the Life-Cycle Model is an intertemporal elasticity of substitution for leisure below unity.

Households’ Heterogeneous Welfare Effects of Using Home Equity for Life Cycle Consumption

“…Since 𝛾 is in the range of 0.5 to 3.5, the inverse relationship with the 𝐼𝐸𝑆 implies values in the range of 0.29 to 2 which is consistent with the contemporary literature (Ameriks et al, 2020). Also, with recent estimates for the Netherlands (Been and Goudswaard, 2023;.…”

“…Hence, the welfare gains from liquidating housing wealth may be interpreted as an upper bound for countries with less regulated pension, (long term) health care insurance, and housing markets.6 This is consistent with empirical evidence fromKnoef et al (2016),Been and Goudswaard (2023) andVan Ooijen et al (2015),Suari-Andreu et al (2019) showing that Dutch households have high net replacement rates, do not decrease spending, and do not decumulate wealth at retirement, respectively.…”

“…The literature typically finds estimates of 0.4 ≤ 𝐼𝐸𝑆 ≤ 0.8, but recent evidence from Rogerson and Wallenius (2016) suggests that these values of the 𝐼𝐸𝑆 are too low and that the 𝐼𝐸𝑆 is likely to be above unity. Empirical estimates for the Netherlands from Kapteyn and Teppa (2003), Been and Goudswaard (2023), suggest that 0.5 ≤ 𝐼𝐸𝑆 ≤ 0.8 (i.e. 1.25 ≤ 𝛾 ≤ 2).…”

Prolonged Worklife Among Grandfathers: Spillover Effects on Grandchildren'S Educational Outcomes

“…Such evidence of responsiveness to the statutory retirement age is also found for the Netherlands in recent papers by Atav et al (2021) and Nagore Garcia et al (2021). For a more extensive discussion on the discontinuity, we refer to Been and Goudswaard (2021).…”

Do Social Pensions Affect the Physical and Mental Health of Rural Children in China? An Intergenerational Care Perspective

“…We used regression discontinuity (RD) to test the effect of the NRP on the physical and mental health of rural children. Among the econometric methods used to identify causal effects, regression discontinuity is a rigorous quasi-randomized trial method, which is often used in policy evaluation [ 107 , 108 , 109 ] and exhibits a number of advantages, such as bypassing many of the questions concerning model specification, assessing the possibility of manipulation of the assignment variable, and exploring the sensitivity of the results to the inclusion of baseline covariates [ 110 , 111 , 112 ]. The basic idea of this method is that the samples near both sides of the discontinuity are comparable in all characteristics.…”