What explains fertilit? Evidence from Italian Pension reforms

Francesco Billari and Vincenzo Galasso

No 369, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: Why do people have kids in developed societies? We propose an empirical test of two economic theories of fertility — children as “consumption” or “investment” good. We use as a natural experiment the Italian pension reforms of the 90s, which by decreasing expected pension benefits generated a large negative income effect, with a sharp discontinuity across workers. This policy experiment is particularly well suited, since lower future pensions are expected to have differential effects on fertility under the “consumption” and "investment" theories. Empirical analyses identify a causal, robust positive effect of less generous future pensions on postreform fertility. These findings are consistent with an “old-age security” motive also for contemporary fertility in advanced societies or with the original Becker- Lewis (1973) version of the “consumption” theory, based on the interaction between quantity and quality of children.

Date: 2010
New Economics Papers: this item is included in nep-age
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Related works:
Working Paper: What Explains Fertility? Evidence from Italian Pension Reforms (2009)
Working Paper: What explains fertility? Evidence from Italian pension reforms (2009)
Working Paper: What Explains Fertility? Evidence from Italian Pension Reforms (2008)
Working Paper: What Explains fertility? Evidence from Italian pension reforms (2008)
Working Paper: What Explains Fertility? Evidence from Italian Pension Reforms (2008)
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