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Household structure and consumption insurance of the elderly

journal contribution
posted on 01.04.2008, 00:00 authored by Aydogan UlkerAydogan Ulker
This paper examines the role of household formation in providing consumption insurance to the elderly. Using data from the Consumer Expenditure Surveys, raw tabulations of per adult equivalent consumption indicate that the elderly who live alone have higher levels of well-being relative to those who live with others. This is misleading, however, because the decision to live alone is clearly endogenous. The empirical estimation accounts for this endogeneity using data from the Panel Study of Income Dynamics. The results provide evidence that household formation plays a significant role in maintaining consumption levels. Without the opportunity to live with others, the welfare gap measured by the difference between per adult equivalent consumption levels of dependent and independent livers would be even larger. These findings suggest that co-residing with others effectively supplements social security, pensions, and private savings and helps the elderly to smooth consumption in old age.

History

Journal

Journal of polulation economics

Volume

21

Issue

2

Pagination

373 - 394

Publisher

Springer

Location

Heidelberg, Germany

ISSN

0933-1433

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2007, Springer-Verlag

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