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Fertility and Social Security

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Author Info
Michele Boldrin
Mariacristina De Nardi
Larry E. Jones

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Abstract

The data show that an increase in government provided old-age pensions is strongly correlated with a reduction in fertility. What type of model is consistent with this finding? We explore this question using two models of fertility, the one by Barro and Becker (1989), and the one inspired by Caldwell and developed by Boldrin and Jones (2002). In the Barro and Becker model parents have children because they perceive their children's lives as a continuation of their own. In the Boldrin and Jones' framework parents procreate because the children care about their old parents' utility, and thus provide them with old age transfers. The effect of increases in government provided pensions on fertility in the Barro and Becker model is very small, and inconsistent with the empirical findings. The effect on fertility in the Boldrin and Jones model is sizeable and accounts for between 55 and 65% of the observed Europe-US fertility differences both across countries and across time and over 80% of the observed variation seen in a broad cross-section of countries. Another key factor affecting fertility the Boldrin and Jones model is the access to capital markets, which can account for the other half of the observed change in fertility in developed countries over the last 70 years.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11146.

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Date of creation: Feb 2005
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Handle: RePEc:nbr:nberwo:11146

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Find related papers by JEL classification:
E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
J10 - Labor and Demographic Economics - - Demographic Economics - - - General
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Heinrich Hock & David N. Weil, 2006. "The Dynamics of the Age Structure, Dependency, and Consumption," NBER Working Papers 12140, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Jones, Larry E. & Schoonbroodt, Alice, . "Baby Busts and Baby Booms: The Fertility Response to Shocks in Dynastic Models," Discussion Paper Series In Economics And Econometrics 0706, Economics Division, School of Social Sciences, University of Southampton. [Downloadable!]
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  4. Erasmo Papagni, 2008. "The Long-run Effects of Household Liquidity Constraints and Taxation on Fertility, Education, Saving, and Growth," Discussion Papers 11_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy. [Downloadable!]
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  6. Larry E. Jones & Alice Schoonbroodt & Michèle Tertilt, 2008. "Fertility Theories: Can They Explain the Negative Fertility-Income Relationship?," NBER Working Papers 14266, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Michael Bar & Oksana Leukhina, . "Demographic Transition and Industrial Revolution: A Macroeconomic Investigation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics. [Downloadable!] (restricted)
    Other versions:
  8. Papagni, Erasmo, 2008. "The Long-run Effects of Household Liquidity Constraints and Taxation on Fertility, Education, Saving and Growth," MPRA Paper 12793, University Library of Munich, Germany. [Downloadable!]
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  10. Aoki, Takaaki, 2008. "On the Implications of Two-way Altruism in Human-Capital-Based OLG Model," MPRA Paper 12492, University Library of Munich, Germany. [Downloadable!]
  11. Francesco C.Billari & Vincenzo Galasso, 2008. "What Explains fertility? Evidence from Italian pension reforms," Working Papers 343, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
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  12. Martín Gonzalez-Eiras & Dirk Niepelt, 2005. "Sustaining Social Security," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  13. Larry E. Jones & Alice Schoonbroodt, 2007. "Complements versus Substitutes and Trends in Fertility Choice in Dynastic Models," NBER Working Papers 13680, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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