Does Retirement Affect Household Energy Consumption Structure? Evidence from a Regression Discontinuity Design

Abstract

Whether retirement can affect household energy consumption structure is an interesting topic in relation to environment and aging. Based on China’s Urban Household Survey (UHS) data, we adopt a regression discontinuity design (RDD) to identify this causal effect. The empirical results show that households suddenly reduce their overall energy consumption by about 2.5 percent when they retire. Specifically, retirement greatly reduces household energy consumption expenditure related to work by about 55.4 percent, reduces non-durable products by about 12.1 percent, and reduces dining out consumption by about 55.3. Moreover, the mechanism analysis shows that householders reduce their social activities after retirement and spend much more time at home, so that the direct energy consumed increases and the indirect energy consumed decreases. The reduction in household non-durable energy consumption expenditure after retirement is closely related to the reduction in work-related energy consumption. Our conclusion has passed a series of validity tests and robustness tests. Our finding implies that it is valuable to design energy policies by considering these causal effects.