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Saving and Consumption When Children Move Out

Alexander Klos and Simon Rottke

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: Based on the German Socio-economic Panel (SOEP), we show that household consumption drops and saving rises significantly within four years after a child moves out of a household. Per capita consumption of parents is approximately leveled up to that of childless peers after all children are gone. We conclude with respect to the adequacy of saving rates that calibrated life-cycle models assuming a smoothing of per capita consumption for parents with children in the household underestimate the wealth needed to smooth consumption in the long run.

JEL-codes: D10 D12 D14 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79786

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