Retirement and household decisions

This thesis considers survey data to evaluate the effect of retirement on household consumption and investment choices and on individual well-being. The second chapter studies the causal effect of retirement on the marginal propensity to consume. An average contraction of -3.3 percentage points is measured and a heterogeneity of the effect is recognized with respect to the gender of the head of the household and the available liquidity. The third chapter evaluates the causal effect of retirement on investment choices. Considering the Italian context in which white-collar workers receive a huge infusion of liquidity upon retirement, it is shown that new retirees subscribe to new and riskier types of investments. In particular, participation in the stock market increased by 8.9 percentage points and the purchase of real estate such as a residence increased by 7.4 percentage points. The fourth chapter analyzes the consequences of retirement on individual well-being defined in terms of life satisfaction, quality of life and frailty index. Leaving the labor market has a beneficial effect on all components of well-being: life satisfaction increases by 2.8 percentage points, quality of life increases by 4.6 percentage points and the frailty index decreases by -7.4 percentage points. These variations are persistent, greater for those taking early retirement, for women and for those living in non-Mediterranean countries.