Based on the German Socio-economic Panel (SOEP), we show that household consumption drops and saving rises significantly within four years after a child moves out of a household. Per capita consumption of parents is approximately leveled up to that of childless peers after all children are gone....

The study follows Modiglianis "Life Cycle Hypothesis" and surveys the influence of private income and wealth to private consumption. Dealing with data for the unified Germany from 1991 to 2002 linear regressions indicate a strong positive relationship between consumption and income. The...