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What Explains Fertility? Evidence from Italian Pension Reforms

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Author Info
Billari, Francesco C.
Galasso, Vincenzo

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

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Find related papers by JEL classification:
D64 - Microeconomics - - Welfare Economics - - - Altruism
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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  2. Firouz Gahvari, 2009. "Friedman Rule in a Model with Endogenous Growth and Cash-in-advance Constraint," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  3. Stergios Skaperdas, 2009. "The Costs of Organized Violence: A Review of the Evidence," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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