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What Explains fertility? Evidence from Italian pension reforms

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  • Francesco C.Billari
  • Vincenzo Galasso

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 IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 343.

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Date of creation: 2008
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Handle: RePEc:igi:igierp:343
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Find related papers by JEL classification:
  • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
  • 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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Cited by:

  1. Fenge, Robert & Scheubel, Beatrice, 2014. "Pensions and fertility: back to the roots - The introduction of Bismarck's pension scheme and the European fertility decline," Working Paper Series 1734, European Central Bank.
  2. Melinda Mills & Nicoletta Balbo, 2011. "The influence of the family network on the realisation of fertility intentions," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 9(1), pages 179-206.
  3. Michael Funke & Marc Gronwald, 2009. "A Convex Hull Approach to Counterfactual Analysis of Trade Openness and Growth," CESifo Working Paper Series 2692, CESifo Group Munich.
  4. M.L. Leroux & P. Pestieau, 2014. "Social Security and Family Support," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 115-143, February.
  5. Mikko Puhakka & Matti Viren, 2012. "Social Security, Saving and Fertility," Finnish Economic Papers, Finnish Economic Association, vol. 25(1), pages 28-42, Spring.
  6. Erich Battistin & Michele De Nadai & Mario Padula, 2015. "Roadblocks on the Road to Grandma’s House: Fertility Consequences of Delayed Retirement," Working Papers 748, Queen Mary University of London, School of Economics and Finance.

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