Announcing Effect: Delaying Retirement and Household Consumption Structure

Abstract The announcement of the policy of gradually delaying retirement most likely has noteworthy social and economic implications. Although current literature has primarily focused on the macroeconomic effects of postponing retirement, insufficient attention has been devoted to the influence on micro-level household consumption. To bridge this gap, we utilized data from the China Health and Retirement Longitudinal Survey (CHARLS) database and employed the Differences-in-Differences (DID) method to analyze the consequences of announcing a gradual delay in retirement on household consumption structure. The findings suggest that the policy announcement substantially reduced the proportion of expenditures related to enjoyment and development in total household consumption, leading to an overall decline in consumption. Moreover, the effect varied significantly by gender and education level. Specifically, men with less education were more likely to reduce their consumption upon hearing the announcement. The practical implications of these empirical results are pertinent to the flexible implementation of the decision to delay retirement. JEL: I15