MANDATORY RETIREMENT AND THE CONSUMPTION PUZZLE: DISENTANGLING PRICE AND QUANTITY DECLINES

This study investigates changes in household consumption at retirement based on a comprehensive, diary-based household survey from China. We focus on disentangling price changes from quantity changes at retirement. The mandatory retirement policy in China provides a quasi-experimental setting for nonparametric identification of the true causal effects of fully anticipated retirement. Using a regression discontinuity design, we find that food expenditure declines at retirement, particularly among the less-educated group. We further show that this decline is driven by a reduction in prices rather than quantities. These findings, along with a documented increase in shopping time for food upon retirement among the less-educated households, are consistent with a time allocation model in which education enhances the value of leisure.