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Social Security, Saving and Fertility

Author

Listed:
  • Mikko Puhakka

    (Department of Economics, University of Oulu)

  • Matti Viren

    (Department of Economics and the Public Choice Research Centre, University of Turku and Bank of Finland)

Abstract

We investigate the effect of government policies on fertility in a model where children are mainly seen as investment goods. To illustrate this effect we construct a simple overlapping generations economy in which households (parents) can invest both in children and financial assets. An introduction of the public social security system lowers the incentive to have children, i.e. fertility will be lower. This is an important negative externality. We test some of the model’s basic implications using unique long historical panel data from 11 countries for the period 1750–2000. In addition, we use two additional, more recent, data sets to reinforce the empirical results obtained with historical data. These analyses show that there is a positive relationship between ageing and fertility if we control for the key determinants of fertility. By contrast, there is a strong negative relationship between (various indicators of) social security and fertility. Empirical evidence is found for the notion that child support increases fertility.

Suggested Citation

  • Mikko Puhakka & Matti Viren, 2012. "Social Security, Saving and Fertility," Finnish Economic Papers, Finnish Economic Association, vol. 25(1), pages 28-42, Spring.
    • Handle: RePEc:fep:journl:v:25:y:2012:i:1:p:28-42
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    References listed on IDEAS

    as
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    9. Alessandro Cigno & Luca Casolaro & Furio C. Rosati, 2002. "The Impact of Social Security on Saving and Fertility in Germany," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(2), pages 189-211, May.
    10. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct.
    11. Rosati, Furio Camillo, 1996. "Social security in a non-altruistic model with uncertainty and endogenous fertility," Journal of Public Economics, Elsevier, vol. 60(2), pages 283-294, May.
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    Cited by:

    1. Robert Fenge & Beatrice Scheubel, 2017. "Pensions and fertility: back to the roots," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(1), pages 93-139, January.

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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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