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Durable and nondurable consumption, health and education expenditures over the life-cycle in Turkey

2015-8
Cilasun, Seyit Mümin
Kırdar, Murat Güray
In this paper, we investigate the life-cycle profiles of household consumption and its components in Turkey using the 2003 Turkish Household Budget Survey. We find that consumption tracks income quite closely over the life-cycle, which contradicts the implication of the life-cycle model. However, the adult-equivalent consumption profile is much flatter. Although this could be interpreted in favor of the life-cycle model, some life-cycle dynamics are still apparent in the adult-equivalent consumption profile. Other major findings are: i) The durable consumption profile of Turkish households peaks at a much later age than those of their counterparts in developed countries. ii) Out-of-pocket health expenditures are quite constant over the life-cycle, which is likely to stem from the Turkish Social Security System. iii) There is substantial difference in education expenditures according to the household head’s education, which suggests that children with less-educated parents might be mired in a low human-capital trap.