IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03913064.html
   My bibliography  Save this paper

Insecure old-age security

Author

Listed:
  • M. Jellal
  • François-Charles Wolff

    (TEPP - Théorie et évaluation des politiques publiques - CNRS - Centre National de la Recherche Scientifique, LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Nantes Univ - IAE Nantes - Nantes Université - Institut d'Administration des Entreprises - Nantes - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université)

Abstract

In this paper, we examine the old-age security hypothesis according to which parents rear children because they expect the latter to care for them in their later years. In developing countries where there are no perfect capital markets, children are usually viewed as a potential source of income and as a time-related support in old age. However, investing in children remains risky. By focusing on uncertainty about the parental consumption during old age, we show that there exists a precautionary motive for the demand for children so that fertility of prudent parents is expected to increase. Copyright 2002, Oxford University Press.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • M. Jellal & François-Charles Wolff, 2022. "Insecure old-age security," Post-Print hal-03913064, HAL.
    • Handle: RePEc:hal:journl:hal-03913064
    DOI: 10.1093/oep/54.4.636
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mark Kazarosian, 1997. "Precautionary Savings-A Panel Study," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 241-247, May.
    2. Entwisle, Barbara & Winegarden, C R, 1984. "Fertility and Pension Programs in LDCs: A Model of Mutual Reinforcement," Economic Development and Cultural Change, University of Chicago Press, vol. 32(2), pages 331-354, January.
    3. Ehrlich, Isaac & Lui, Francis T, 1991. "Intergenerational Trade, Longevity, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1029-1059, October.
    4. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
    5. Christopher D. Carroll & Andrew A. Samwick, 1998. "How Important Is Precautionary Saving?," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 410-419, August.
    6. Jellal, Mohamed & Wolff, Francois-Charles, 2000. "Shaping intergenerational relationships: the demonstration effect," Economics Letters, Elsevier, vol. 68(3), pages 255-261, September.
    7. Cigno, Alessandro & Rosati, Furio C., 1996. "Jointly determined saving and fertility behaviour: Theory, and estimates for Germany, Italy, UK and USA," European Economic Review, Elsevier, vol. 40(8), pages 1561-1589, November.
    8. Skinner, Jonathan, 1988. "Risky income, life cycle consumption, and precautionary savings," Journal of Monetary Economics, Elsevier, vol. 22(2), pages 237-255, September.
    9. Nerlove, Marc & Razin, Assaf & Sadka, Efraim, 1987. "Household and Economy," Elsevier Monographs, Elsevier, edition 1, number 9780125157520 edited by Shell, Karl.
    10. 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.
    11. Cigno, Alessandro & Rosati, Furio Camillo, 1992. "The Effects of Financial Markets and Social Security on Saving and Fertility Behaviour in Italy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 5(4), pages 319-341.
    12. Jensen, Eric R, 1990. "An Econometric Analysis of the Old-Age Security Motive for Childbearing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(4), pages 953-968, November.
    13. Cigno, Alessandro, 1992. "Children and Pensions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 5(3), pages 175-183, August.
    14. Nugent, Jeffrey B & Gillaspy, R Thomas, 1983. "Old Age Pensions and Fertility in Rural Areas of Less Developed Countries: Some Evidence from Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 31(4), pages 809-829, July.
    15. Appelbaum, Elie & Katz, Eliakim, 1991. "The Demand for Children in the Absence of Capital and Risk Markets: A Portfolio Approach," Oxford Economic Papers, Oxford University Press, vol. 43(2), pages 292-304, April.
    16. Wildasin, David E, 1990. "Non-neutrality of Debt with Endogenous Fertility," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 414-428, April.
    17. Barmby, T & Cigno, A, 1990. "A Sequential Probability Model of Fertility Patterns," Journal of Population Economics, Springer;European Society for Population Economics, vol. 3(1), pages 31-51, April.
    18. Karen E. Dynan, 1993. "How prudent are consumers?," Working Paper Series / Economic Activity Section 135, Board of Governors of the Federal Reserve System (U.S.).
    19. Dynan, Karen E, 1993. "How Prudent Are Consumers?," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1104-1113, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schäfer, Andreas & Valente, Simone, 2011. "Habit Formation, Dynastic Altruism, And Population Dynamics," Macroeconomic Dynamics, Cambridge University Press, vol. 15(3), pages 365-397, June.
    2. Sarmistha Pal, 2004. "Do Children Act As Old Age Security in Rural India? Evidence from an Analysis of Elderly Living Arrangements," Labor and Demography 0405002, University Library of Munich, Germany, revised 15 Oct 2004.
    3. Sarmistha Pal, 2006. "Elderly Health, Wealth and Co-residence with Adult Children in Rural India," CEDI Discussion Paper Series 06-09, Centre for Economic Development and Institutions(CEDI), Brunel University.
    4. Jellal, Mohamed & Bouzahzah, Mohamed, 2012. "Social security family finance and demography," MPRA Paper 38804, University Library of Munich, Germany.
    5. Pal, Sarmistha, 2007. "Effects of Intergenerational Transfers on Elderly Coresidence with Adult Children: Evidence from Rural India," IZA Discussion Papers 2847, Institute of Labor Economics (IZA).
    6. Li, Carmen A & Olivera, Javier, 2005. "Participation in the Peruvian reformed pension system," Economics Discussion Papers 3618, University of Essex, Department of Economics.
    7. Carmen Li & Javier Olivera, 2009. "Cobertura y afiliación al sistema privado de pensiones del Perú," Capítulos de Libros PUCP / Chapters of PUCP books, in: Efraín Gonzales de Olarte & Javier M. Iguiñiz Echeverría (ed.), Desarrollo económico y bienestar. Homenaje a Máximo Vega-Centeno, edition 1, chapter 8, pages 221-239, Fondo Editorial - Pontificia Universidad Católica del Perú.
    8. Solveig Cunningham & Kathryn Yount & Michal Engelman & Emily Agree, 2013. "Returns on Lifetime Investments in Children in Egypt," Demography, Springer;Population Association of America (PAA), vol. 50(2), pages 699-724, April.
    9. Appelbaum, Elie & Katz, Eliakim, 1991. "The Demand for Children in the Absence of Capital and Risk Markets: A Portfolio Approach," Oxford Economic Papers, Oxford University Press, vol. 43(2), pages 292-304, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ehrlich, Isaac & Lui, Francis, 1997. "The problem of population and growth: A review of the literature from Malthus to contemporary models of endogenous population and endogenous growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 205-242, January.
    2. Sinn, Hans-Werner, 2004. "The pay-as-you-go pension system as fertility insurance and an enforcement device," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1335-1357, July.
    3. Cigno, A., 2016. "Conflict and Cooperation Within the Family, and Between the State and the Family, in the Provision of Old-Age Security," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 609-660, Elsevier.
    4. Shin-Yi Chou & Jin-Tan Liu & James Hammitt, 2006. "Households’ precautionary behaviors—the effects of the introduction of National Health Insurance in Taiwan," Review of Economics of the Household, Springer, vol. 4(4), pages 395-421, December.
    5. Alba Lugilde & Roberto Bande & Dolores Riveiro, 2018. "Precautionary saving in Spain during the great recession: evidence from a panel of uncertainty indicators," Review of Economics of the Household, Springer, vol. 16(4), pages 1151-1179, December.
    6. Vincenzo Galasso & Roberta Gatti & Paola Profeta, 2009. "Investing for the old age: pensions, children and savings," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 538-559, August.
    7. Gomes, Fábio Augusto Reis & Ribeiro, Priscila Fernandes, 2015. "Estimating the elasticity of intertemporal substitution taking into account the precautionary savings motive," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 108-123.
    8. Reis Gomes, Fábio Augusto, 2020. "Evaluating a consumption function with precautionary savings and habit formation under a general income process," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 157-166.
    9. Santosh Mehrotra & Mario Biggeri, 2002. "Social Protection in the Informal Economy: Home based women workers and outsourced manufacturing in Asia," Papers inwopa02/24, Innocenti Working Papers.
    10. Engen, Eric M. & Gruber, Jonathan, 2001. "Unemployment insurance and precautionary saving," Journal of Monetary Economics, Elsevier, vol. 47(3), pages 545-579, June.
    11. Erik Hurst & Arthur Kennickell & Annamaria Lusardi & Francisco Torralba, 2005. "Precautionary Savings and the Importance of Business Owners," NBER Working Papers 11731, National Bureau of Economic Research, Inc.
    12. Jellal, Mohamed & Bouzahzah, Mohamed, 2012. "Social security family finance and demography," MPRA Paper 38793, University Library of Munich, Germany.
    13. Dedah, Cheikhna O. & Mishra, Ashok K., 2009. "Permanent Income and the Importance of Precautionary Savings: An Instrumental Variable Approach," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49522, Agricultural and Applied Economics Association.
    14. Lugilde, Alba & Bande, Roberto & Riveiro, Dolores, 2017. "Precautionary Saving: a review of the theory and the evidence," MPRA Paper 77511, University Library of Munich, Germany.
    15. Michele Limosani & Emanuele Millemaci, 2014. "Precautionary savings of agents with heterogeneous risk aversion," Applied Economics, Taylor & Francis Journals, vol. 46(20), pages 2342-2361, July.
    16. Luc Arrondel & Hector Calvo Pardo, 2008. "Les Français sont-ils prudents ? Patrimoine et risque sur les revenus des ménages," Working Papers halshs-00585994, HAL.
    17. Chou, Shin-Yi & Liu, Jin-Tan & Hammitt, James K., 2003. "National Health Insurance and precautionary saving: evidence from Taiwan," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1873-1894, September.
    18. Abdul Jalil, Ahmad Zafarullah, 2009. "The importance of precautionary saving motive among Indonesian households," MPRA Paper 25189, University Library of Munich, Germany.
    19. Lugilde, Alba, 2018. "Does income uncertainty affect Spanish household consumption?," MPRA Paper 87110, University Library of Munich, Germany.
    20. Martin Werding & Sonja Munz & Vera Gács, 2008. "Fertility and prosperity : links between demography and economic growth," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 42, October.

    More about this item

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D1 - Microeconomics - - Household Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-03913064. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.