What Explains Fertility? Evidence from Italian Pension Reforms

44 Pages Posted: 18 Dec 2008

See all articles by Francesco C. Billari

Francesco C. Billari

Bocconi University - Department of Policy Analysis and Public Management

Vincenzo Galasso

University of Lugano; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

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

Billari, Francesco C. and Galasso, Vincenzo, What Explains Fertility? Evidence from Italian Pension Reforms (October 2008). CEPR Discussion Paper No. DP7014. Available at SSRN: https://ssrn.com/abstract=1311138

Francesco C. Billari

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

Vincenzo Galasso (Contact Author)

University of Lugano ( email )

Via Giuseppe Buffi 13
Lugano, 6900
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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