The Determinants of Consumption of 50+ Population in Croatia

Abstract

The aim of this paper is to explore the basic features of consumption of 50+ population in Croatia by using the data from Survey of Health, Ageing, and Retirement in Europe -SHARE (SHARE, 2017). Thereby we use an extended model of consumption that includes basic consumption determinants that are stipulated by the economic theory and empirical research, namely income and wealth which are retrieved from SHARE database and augment it with other economic and socio-demographic features of "50+" population that may exhibit an influence on consumption decisions. In order to model household consumption, we use ordinary least squares (OLS) method when estimating the baseline regression equation. Additionally, control variables labour status, gender and marital status are used in order to explore whether the household consumption is more responsive to changes in household income and wealth for specific groups of respondents. The results of the analysis indicate that retired individuals have higher marginal propensity to consume compared to the employed individuals, which is in line with the life-cycle theory.