Ph.d.-forsvar: Thomas Høgholm Jørgensen: Life-Cycle Consumption and Retirement within the Family
This dissertation contains four self-contained chapters. The first two chapters are primarily methodological. The first chapter evaluates two recent numerical approaches to solving and estimating stochastic dynamic programming models. In this chapter, I show that the method used in all subsequent chapters is extremely computationally efficient and accurate.
The second chapter investigates how alternative estimators, based on the consumption Euler equation, perform. These estimators are work horses in the existing literature on intertemporal consumption allocation. I show how these estimators produce biased estimates of the effect of children on consumption if risk averse households face credit constraints. I also show that these estimators may be used to estimate bounds on the effect of children on consumption.
The two subsequent chapters are applications of the methods, techniques and challenges studied in the first two chapters. Specifically, in chapter three, I estimate how children affect consumption over the life cycle. I find that for Danish and US households (in the PSID) the effect of children on consumption is smaller than previously assumed. In the fourth chapter, I analyze how Danish couples enjoy leisure time together. I find that leisure is twice as enjoyable if a spouse is also retired. I also show that ignoring leisure complementarities underestimates the government surplus from increasing the retirement age significantly.