73rd International Atlantic Economic Conference

March 28 - 31, 2012 | Istanbul, Turkey

Consumption function for Poland: Is life-cycle hypothesis legitimate?

Friday, 30 March 2012: 8:30 AM
Wladyslaw Welfe, Ph.D , University of Lodz, Lodz, Poland
Katarzyna Leszkiewicz-Kedzior, Master , Econometric Models and Forecasts, University of Lodz, Lodz, Poland
In developed countries the rising percentage of households behaves rationally. It is represented by the life-cycle hypothesis of determining their incomes. The W models of the Polish economy assumed number of those households is small and this approach was neglected.

The paper presents the results of a research project aimed at empirical testing, whether the share of “rational” households in Poland was small and their majority was income-constrained. We calculated the expected life-cycle income using the information on the structure of employment by age and the sample of 1970-2008. The obtained results show that the share of “rational” households was below 10%.