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Pensions and Fertility: Micro-Economic Evidence

Author

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  • Danzer, Alexander M.

    () (Catholic University of Eichstätt-Ingolstadt)

  • Zyska, Lennard

    () (Catholic University of Eichstätt-Ingolstadt)

Abstract

This study identifies the causal effect of pension generosity on women's fertility behavior. It capitalizes on Brazil's expansion of the pension system to rural workers, whose pension wealth subsequently more than tripled. Event study, difference-in-differences and instrumental variable methods show that the pension reform reduces the propensity of childbearing of women in fertile age by 10% in the short-run. Completed fertility declines by 1.3 children within 20 years after the reform, reducing the contribution base of the Pay-As-You-Go pension system in the long-run. The fertility response is strongest at higher birth parities, among older women and among mothers with sons.

Suggested Citation

  • Danzer, Alexander M. & Zyska, Lennard, 2020. "Pensions and Fertility: Micro-Economic Evidence," IZA Discussion Papers 13048, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp13048
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    References listed on IDEAS

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    1. Catalina Amuedo-Dorantes & Laura Juarez, 2015. "Old-Age Government Transfers and the Crowding Out of Private Gifts: The 70 and Above Program for the Rural Elderly in Mexico," Southern Economic Journal, Southern Economic Association, vol. 81(3), pages 782-802, January.
    2. Nicholas Barr & Peter Diamond, 2009. "Reforming pensions: Principles, analytical errors and policy directions," International Social Security Review, John Wiley & Sons, vol. 62(2), pages 5-29, April.
    3. Francesco C. Billari & Vincenzo Galasso, 2008. "What Explains Fertility? Evidence from Italian Pension Reforms," CSEF Working Papers 209, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    4. Isis Gaddis & Janneke Pieters, 2017. "The Gendered Labor Market Impacts of Trade Liberalization: Evidence from Brazil," Journal of Human Resources, University of Wisconsin Press, vol. 52(2), pages 457-490.
    5. Cai, Fang & Giles, John & Meng, Xin, 2006. "How well do children insure parents against low retirement income? An analysis using survey data from urban China," Journal of Public Economics, Elsevier, vol. 90(12), pages 2229-2255, December.
    6. Luiz de Mello & Mombert Hoppe, 2005. "Education Attainment in Brazil: The Experience of FUNDEF," OECD Economics Department Working Papers 424, OECD Publishing.
    7. World Bank, 2003. "Rural Poverty Alleviation in Brazil : Toward an Integrated Strategy," World Bank Publications, The World Bank, number 15115, June.
    8. Alexander M. Danzer, 2013. "Benefit Generosity and the Income Effect on Labour Supply: Quasi‐Experimental Evidence," Economic Journal, Royal Economic Society, vol. 123, pages 1059-1084, September.
    9. Steve Swidler, 1983. "An Empirical Test of the Effect of Social Security on Fertility in the United States," The American Economist, Sage Publications, vol. 27(2), pages 50-57, October.
    10. Francesco C. Billari & Vincenzo Galasso, 2008. "What Explains Fertility? Evidence from Italian Pension Reforms," CSEF Working Papers 209, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    11. Isaac Ehrlich & Jinyoung Kim, 2007. "Social Security and Demographic Trends: Theory and Evidence from the International Experience," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(1), pages 55-77, January.
    12. Alexandre Chiavegatto Filho & Ichiro Kawachi, 2013. "Are sex-selective abortions a characteristic of every poor region? Evidence from Brazil," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 58(3), pages 395-400, June.
    13. 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.
    14. Ehrlich, Isaac & Zhong, Jian-Guo, 1998. "Social Security and the Real Economy: An Inquiry into Some Neglected Issues," American Economic Review, American Economic Association, vol. 88(2), pages 151-157, May.
    15. Braga, Breno, 2018. "The Effects of Trade Exposure on Marriage and Fertility Choices: Evidence from Brazil," IZA Discussion Papers 11875, Institute of Labor Economics (IZA).
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    More about this item

    Keywords

    pension wealth; fertility; old-age security hypothesis; quasi-experiment; PAYG; Brazil;

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving

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