Understanding the Outcomes of Older Job Losers

We use an unusually rich Canadian survey to examine how post-job-loss behaviour and outcomes vary with age of the job loser. We find that older job losers experience greater post-displacement joblessness, and are less likely to return quickly to satisfactory employment. We show that this apparent age effect is not a job tenure effect or wealth effect. We also find that older job losers, compared to mid-career job losers, are as likely to report searching for work, but that they search less intensely (reporting fewer hours of search, and lower out of pocket expenditures on search). They are also less likely to retrain, less likely to undertake a geographic move, and less likely to switch occupations. Thus, the data suggest older job losers are less likely to make career investments after job loss. This may be a rational response to a shorter time horizon, or to more limited labour market opportunities.job loss, job search, older workers

Involuntary Retirement and the Resolution of the Retirement-Consumption Puzzle: Evidence from Australia

A substantial body of international research has shown that household expenditure on food and non-durables significantly decreases at the time of retirement -- a finding that is inconsistent with the standard life-cycle model of consumption if retirement is an anticipated event. This fall in expenditure has become known as the `retirement- consumption puzzle.' We analyze rich Australian panel data to assess the Australian evidence on the puzzle. We find strong evidence of a fall in expenditures on groceries, food consumed at home and outside meals with retirement. The observed decline in expenditure is explained by a subset of households experiencing an unanticipated wealth shock, such as a major health event or long-term job loss, at the time of retirement. This finding is corroborated by an analysis of alternative measures of household well-being, including indicators of financial hardship, and self-reported financial and life satisfaction. For the majority of households retirement is anticipated and there is no decline in economic welfare at retirement. However, for an important minority, retirement is `involuntary' and these households experience a marked decline across all indicators of economic well-being.Consumption Smoothing, Household Expenditure, Retirement

Home Cooking, Food Consumption and Food Production among the Unemployed and Retired Households

Utilizing the 1996 Canadian Food Expenditure survey matched with Canadian Nutrient File, we separate actual food consumption from observed expenditure and test the Permanent Income/Life Cycle Hypothesis on the true consumption data. We find that the lower food expenditure during periods of unemployment or retirement (previously reported in the literature), does not translate into poorer nutrition. Household calorie intake and major nutrient intake seem to be unaffected by changes in employment status. We find evidence that unemployed or retired households substitute food purchased from restaurants for food purchased for at home consumption. Further, with the 1998 Time Use Survey we find that individuals who are not employed devote more time for food preparation. Finally we present limited evidence that unemployed and retired households substitute precooked meals for meals made from primary ingredients.Food Production, Nutrition, Consumption Smoothing

Measurement errors in recall food consumption data

Recall food consumption data, which is the basis of a great deal of empirical work, is believed to suffer from considerable measurement error. Diary records are believed to be very accurate. We study a unique data set that collects recall and diary data from the same households. Measurement errors in recall food consumption data appear to be substantial, and they do not have the properties of classical measurement error. We also find evidence that the diary measures are themselves imperfect. We consider the implications of our findings for modelling demand, measuring inequality, and estimating inter-temporal preference parameters. Keywords: expenditure, consumption, measurement error, survey data

Measurement Errors in Recall Food Expenditure Data

Household expenditure data is an important input into the study of consumption and savings behaviour and of living standards and inequality. Because it is collected in many surveys, food expenditure data has formed the basis of much work in these areas. Recently, there has been considerable interest in properties of different ways of collecting expenditure information. It has also been suggested that measurement error in expenditure data seriously affects empirical work based on such data. The Canadian Food Expenditure Survey asks respondents to first estimate their household's food expenditures and then record food expenditures in a diary for two weeks. This unique experiment allows us to compare recall and diary based expenditure data collected from the same individuals. Under the assumption that the diary measures are "true" food consumption, this allows us to observe errors in measures of recall food consumption directly, and to study the properties of those errors. Under this assumption, measurement errors in recall food consumption data appear to be substantial, and they do not have many of the properties of classical measurement error. In particular, they are neither uncorrelated with true consumption nor conditionally homoscedastic. In addition, they are not well approximated by either a normal or log normal distribution. We also show evidence that diary measures are themselves imperfect, suffering for example, from "diary exhaustion". This suggests alternative interpretations for the differences between recall and diary consumption measures. Finally, we compare estimates of income and household size elasticities of per capita food consumption based on the two kinds of expenditure data and, in contrast to some previous work, find little difference between the two.expenditure, consumption, surveys

Involuntary Retirement and the Resolution of the Retirement-Consumption Puzzle: Evidence from Australia

A substantial body of international research has shown that household expenditure on food and non-durables significantly decreases at the time of retirement - a finding that is inconsistent with the standard life-cycle model of consumption if retirement is an anticipated event. This fall in expenditure has become known as the `retirement-consumption puzzle.' We analyze rich Australian panel data to assess the Australian evidence on the puzzle. We find strong evidence of a fall in expenditures on groceries, food consumed at home and outside meals with retirement. The observed decline in expenditure is explained by a subset of households experiencing an unanticipated wealth shock, such as a major health event or long-term job loss, at the time of retirement. This finding is corroborated by an analysis of alternative measures of household well-being, including indicators of financial hardship, and self-reported financial and life satisfaction. For the majority of households retirement is anticipated and there is no decline in economic welfare at retirement. However, for an important minority, retirement is `involuntary' and these households experience a marked decline across all indicators of economic well-being.Consumption Smoothing; Household Expenditure; Retirement

Dimensions of Inequality in Canada

In this paper, we document some features of the distribution of income, consumption and wealth in Canada using survey data from many different sources. We find that wage and income inequality has increased substantially over the last 30 years, but that much of this rise was offset by the tax and transfer system. As a result, the rise in consumption inequality has been relatively mild. We also document that wealth inequality has remained fairly stable since 1999. A comparison of our results - obtained using confidential data - suggests that while some aspects of inequality are well captured by publicly available data, others paint a drastically different picture.Income Inequality, Consumption Inequality, Wealth Inequality

Measurement Errors in Recall Food Expenditure Data

Household expenditure data is an important input into the study of consumption and savings behaviour and of living standards and inequality. Because it is collected in many surveys, food expenditure data has formed the basis of much work in these areas. Recently, there has been considerable interest in properties of different ways of collecting expenditure information. It has also been suggested that measurement error in expenditure data seriously affects empirical work based on such data. The Canadian Food Expenditure Survey asks respondents to first estimate their household's food expenditures and then record food expenditures in a diary for two weeks. This unique experiment allows us to compare recall and diary based expenditure data collected from the same individuals. Under the assumption that the diary measures are "true" food consumption, this allows us to observe errors in measures of recall food consumption directly, and to study the properties of those errors. Under this assumption, measurement errors in recall food consumption data appear to be substantial, and they do not have many of the properties of classical measurement error. In particular, they are neither uncorrelated with true consumption nor conditionally homoscedastic. In addition, they are not well approximated by either a normal or log normal distribution. We also show evidence that diary measures are themselves imperfect, suffering for example, from "diary exhaustion". This suggests alternative interpretations for the differences between recall and diary consumption measures. Finally, we compare estimates of income and household size elasticities of per capita food consumption based on the two kinds of expenditure data and, in contrast to some previous work, find little difference between the two.expenditure, consumption, surveys

Understanding the outcomes of older job losers

We use an unusually rich Canadian survey to examine how post-job-loss behaviour and outcomes vary with age of the job loser. We find that older job losers experience greater post-displacement joblessness, and are less likely to return quickly to satisfactory employment. We show that this apparent age effect is not a job tenure effect or wealth effect. We also find that older job losers, compared to mid-career job losers, are as likely to report searching for work, but that they search less intensely (reporting fewer hours of search, and lower out of pocket expenditures on search). They are also less likely to retrain, less likely to undertake a geographic move, and less likely to switch occupations. Thus, the data suggest older job losers are less likely to make career investments after job loss. This may be a rational response to a shorter time horizon, or to more limited labour market opportunities

Does survey recall error explain the Deaton–Paxson puzzle?

Using recall and diary food expenditure data from Canada, we compare estimates of the household size elasticity of per capita food expenditure. In contrast to Gibson (2002), we find negative elasticities in both recall and diary data. This in turn means we find evidence of the “Deaton–Paxson puzzle” in both diary and recall data. Recall error cannot be the sole explanation of the puzzle