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What Explains Fertility? Evidence from Italian Pension Reforms

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  • Francesco C. Billari
  • Vincenzo Galasso

Abstract

Why do people have kids in developed societies? We propose an empirical test of two alternative theories — children as “consumption” vs. “investment” good. We use as a natural experiment the Italian pension reforms of the 90s that introduced a clear discontinuity in the treatment across workers. This policy experiment is particularly well suited, since the “consumption” motive predicts lower future pensions to reduce fertility, while the “old-age security” to increase it. Our empirical analysis identifies a clear and robust positive effect of less generous future pensions on post-reform fertility. These findings are consistent with “old-age security” even for contemporary fertility.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2646.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2646

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Keywords: old-age security; public pension systems; fertility; altruism;

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References

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Cited by:
  1. Michael Funke & Marc Gronwald, 2009. "A Convex Hull Approach to Counterfactual Analysis of Trade Openness and Growth," CESifo Working Paper Series 2692, CESifo Group Munich.
  2. Mikko Puhakka & Matti Viren, 2012. "Social Security, Saving and Fertility," Finnish Economic Papers, Finnish Economic Association, vol. 25(1), pages 28-42, Spring.
  3. Melinda Mills & Nicoletta Balbo, 2011. "The influence of the family network on the realisation of fertility intentions," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 9(1), pages 179-206.
  4. LEROUX, Marie-Louise & PESTIEAU, Pierre, 2011. "Social security and family support," CORE Discussion Papers 2011045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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