Consumption, Working Hours, and Wealth Determination in a Life Cycle Model

This paper presents an empirical analysis of a life cycle model. We incorporate labor supply and family structure into the standard precautionary savings model and estimate structural parameters based on the moment conditions for the life cycle profiles of consumption, working hours, and wealth accumulation. Our empirical analyses with Japanese household data reveal that consideration of both family structure and idiosyncratic shocks are crucial in modeling consumption and working hours profiles simultaneously under plausible parameter values.