What Explains Fertility? Evidence from Italian Pension Reforms
44 Pages Posted: 18 Dec 2008
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What Explains Fertility? Evidence from Italian Pension Reforms
Date Written: October 2008
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.
Keywords: altruism, fertility, old-age security, public pension systems
JEL Classification: D64, H55, J13
Suggested Citation: Suggested Citation
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