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What Explains Fertility? Evidence from Italian Pension Reforms

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  • Billari, Francesco C.
  • Galasso, Vincenzo

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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7014.

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Date of creation: Oct 2008
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Handle: RePEc:cpr:ceprdp:7014

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

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Cited by:
  1. M.L. Leroux & P. Pestieau, 2014. "Social Security and Family Support," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 115-143, February.
  2. 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.
  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, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 9(1), pages 179-206.
  4. Mikko Puhakka & Matti Viren, 2012. "Social Security, Saving and Fertility," Finnish Economic Papers, Finnish Economic Association, Finnish Economic Association, vol. 25(1), pages 28-42, Spring.

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