Transition to retirement and home-production

Transition to retirement and home productionNon-cognitive skills explain heterogeneous changes in

housework at retirement

Bernardo Fonseca Nunesa

a Behavioural Science Centre, University of Stirling

BSPID, York, 10th April 2015

1 / 26Transition to retirement and home production

Introduction Housework at retirement Personality at retirement Method Results Discussion

1 Introduction

2 Housework at retirement

3 Personality at retirement

4 MethodDataEmpirical strategy

5 Results

6 Discussion

Outline

1 Introduction

5 Results

6 Discussion

Outline

New retirees increase their housework hours:Personality traits explains heterogeneityAssociated with household and individual consumptionmeasuresBritish data within a potential outcomes framework

Housework at retirementCooking, cleaning, doing laundry and grocery shopping

By doing housework, a retiree:Spends new time endowmentAllocates income to pay for non-substitutable marketgoods and servicesMake a decision related to effort, productivity andsatisfaction

The economic role of houseworkHome production substitutes market goods and services

Big Five domains derived from factor analysis (Heckman, 2011)

1 Openness to experience2 Conscientiousness3 Extraversion4 Agreeableness5 Neuroticism

These personality traits help economists to1 explain the heterogeneity of an average causal effect2 better predict economic outcomes3 design economic policies according to groups’/clusters’

characteristics

Integration personality traits + economics

characteristics

+O, +E, -A, -N⇒+remuneration(Nandi and Nicoletti, 2009;Heineck, 2011)+C, +A⇒+job performance(Hurtz and Donovan, 2000; Wittet al., 2002)

Personality and economic outcomes

+O, +E, -A, -N⇒+remuneration(Nandi and Nicoletti, 2009;Heineck, 2011)+C, +A⇒+job performance(Hurtz and Donovan, 2000; Wittet al., 2002)

Personality and economic outcomes

1 Introduction

5 Results

6 Discussion

Outline

Retirement-savings puzzle(Banks et al., 1998)Home production hypothesis(Luengo-Prado and Sevilla,2013)

Housework at retirement

Retirement-savings puzzle(Banks et al., 1998)Home production hypothesis(Luengo-Prado and Sevilla,2013)

Housework at retirement

1 Introduction

5 Results

6 Discussion

Outline

+A, +C, -N⇒+LS(Robinson et al, 2010)+E⇒+Social activity(Lockenhoff et al, 2009)+C⇒+Adjustment tooptimal level of spending(Hurd et al, 2012)

Personality at retirement

1 Introduction

5 Results

6 Discussion

Outline

Longitudinal data from the BHPS (Waves 15-18), aged >= 55:Household and individual characteristicsHours spent on housework tasksBig Five personality traitsTransitions to retirement (group of interest, N=319)Stayed in the labour market (control group, N=3,390)

DataBritish Household Panel Survey

Potential outcomes framework

∆hit ,S=1 = α + δ + ρΘi + κXit + wt + εit (1)

∆hit ,S=0 = α + ρΘi + κXit + wt + εit (2)

δ = E[∆hit ,S=1

]− E

[∆hit ,S=0

∆hit = change in housework hours , Sit is an indicator variable=1 for a transition to retirement (and zero otherwise), Θi is avector of non-cognitive skills, Xit is a vector of HH andindividual characteristics, δ is the average effect of retirementon housework change.

Empirical strategy

1 Introduction

5 Results

6 Discussion

Outline

Average housework change at retirement (hours/week)

Results

By gender and household type:

Results

Average housework change at retirement: robustness checkwith MPS

Results

Balancing condition: Kernel MPS

Results

Marginal effects of personality on housework due to retirement

Results

Predicted housework levels (hours per week):

Results

Predicted HH grocery shopping bill (scale 1-12):

Results

Predicted leisure expenditures (scale 0-12):

Results

Predicted eating out expenditures (scale 0-12):

Results

1 Introduction

5 Results

6 Discussion

Outline

This paper builds on the literature of retirement behaviour:Personality traits explain heterogeneity;Housework is part of life-time wealth;Older people’s consumption patterns and homeproduction;Beyond gender differences and HH composition.

DiscussionHousework at retirement and personality traits

=-1000pt =-1000pt

Bernardo Fonseca Nunes

Behavioural Science CentreTwitter: @_bernardofnUniversity of StirlingScotland

Email: [email protected]

www.stir.ac.uk

Transition to retirement and home-production

Economy & Finance

Transcript of Transition to retirement and home-production