Fertility and Financial Development in South Asia

Muhammad Zakaria (), Bashir Ahmed Fida, Saquib Yousaf Janjua and Syed Jawad Hussain Shahzad
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Muhammad Zakaria: COMSATS Institute of Information Technology
Bashir Ahmed Fida: Modern College of Business and Science
Saquib Yousaf Janjua: COMSATS Institute of Information Technology

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2017, vol. 133, issue 2, No 12, 645-668

Abstract: Abstract The paper empirically examines old-age security hypothesis to explain fertility rates in South Asia. Panel data is used for the period 1972–2013 for seven South Asian countries which include Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The estimated results reveal that in South Asia fertility rate decreases with the increase in financial development. Thus, the findings support old-age security hypothesis that parents use children as financial instruments to secure their old age. This paper validates the theory that the availability of alternative financial tools reduces the incentives of households to have large offspring. Infant mortality is also shown an important factor for high fertility rate in South Asia. This implies that households cover their risk from losing children by producing more children. The results also reveal that fertility rate decreases with the increase in per capita income, which implies that households treat children as inferior good in this region. In other words, households prefer quality of children over quantity of children when their income level increases. The results have also shown that fertility decreases with the increase in education, urbanization, agriculture productivity and industrialization. The study has some important policy implications.

Keywords: Fertility; Old-age security; Financial development; Infant mortality; South Asia (search for similar items in EconPapers)
JEL-codes: C23 G21 J13 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11205-016-1382-6

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