@techreport{NBERw11163,
 title = "Estimating Life-Cycle Parameters from Consumption Behavior at Retirement",
 author = "John Laitner and Dan Silverman",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "11163",
 year = "2005",
 month = "March",
 URL = "http://www.nber.org/papers/w11163",
 abstract = {Using pseudo-panel data, we estimate the structural
parameters of a life--cycle consumption model with discrete labor
supply choice. A focus of our analysis is the abrupt drop in
consumption upon retirement for a typical household. The
literature sometimes refers to the drop, which in the U.S.
Consumer Expenditure Survey we estimate to be approximately 16%,
as the "retirement--consumption puzzle." Although a downward
step in consumption at retirement contradicts predictions from
life--cycle models with additively separable consumption and
leisure, or with continuous work-hour options, a consumption jump
is consistent with a setup having nonseparable preferences over
consumption and leisure and requiring discrete work choices. This
paper specifies a life--cycle model with these latter two elements, and it uses the empirical magnitude of the drop in consumption at
retirement to provide an advantageous method of identifying
structural parameters --- most importantly, the intertemporal
elasticity of substitution.},
}