Author: Battistin Erich Brugiavini Agar Rettore Enrico Weber Guglielmo
Publisher: American Economic Association
ISSN: 0002-8282
Source: The American Economic Review, Vol.99, Iss.5, 2009-12, pp. : 2209-2226
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Abstract
We investigate the size of the consumption drop at retirement in Italy by exploiting pension eligibility information to correct for endogenous retirement. We take a regression discontinuity approach and assume that spending would be smooth around pension eligibility if individuals did not retire. We estimate a 9.8 percent drop associated to retirement. This fall is not driven by liquidity problems for the less well off and can be accounted for by drops in work-related expenses. Retirement also induces a significant drop in the number of grown children living with their parents and this explains most of the retirement consumption drop.
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