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Insecure old-age security

Author

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  • Jellal, Mohamed
  • wolff, François charles

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.

Suggested Citation

  • Jellal, Mohamed & wolff, François charles, 2002. "Insecure old-age security," MPRA Paper 38644, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38644
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    References listed on IDEAS

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    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. 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.
    3. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
    4. Jellal, Mohamed & Wolff, Francois-Charles, 2000. "Shaping intergenerational relationships: the demonstration effect," Economics Letters, Elsevier, vol. 68(3), pages 255-261, September.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. Cigno, Alessandro, 1992. "Children and Pensions," Journal of Population Economics, Springer;European Society for Population Economics, vol. 5(3), pages 175-183, August.
    10. 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.
    11. Wildasin, David E, 1990. "Non-neutrality of Debt with Endogenous Fertility," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 414-428, April.
    12. 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.
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    Citations

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    Cited by:

    1. Schäfer, Andreas & Valente, Simone, 2011. "Habit Formation, Dynastic Altruism, And Population Dynamics," Macroeconomic Dynamics, Cambridge University Press, vol. 15(03), 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 for the Study of Labor (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.

    More about this item

    Keywords

    Old age; security; chilgren; fertility; uncertainty; income;

    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

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