Social Security and its Fertility Effects

We examine the effects of changes of government provided old age pensions on fertility choices in the context of two models of fertility, the one by Barro and Becker (1989), and the one inpired 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 might thus provide their parents with old age transfers. We find that the effect of changes in the size of the public pension system on fertility in the Barro and Becker model depends on whether child rearing costs are primarily in goods or in time, but that the size of such effect is always very small. This is inconsistent with empirical results which find a reduction of between 0.7 and 1.2 children born per woman over the relevant range. In the Boldrin and Jones model increases in the size of the public pension system always decrease fertility, regardless of the type of costs incurred to raise the children. In addition, the quantitative predictions of the model are consistent with the empirical evidence