Bismarck to No Effect: Fertility Decline and the Introduction of Social Insurance in Prussia

43 Pages Posted: 6 Dec 2019

See all articles by Timothy W. Guinnane

Timothy W. Guinnane

Yale University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Jochen Streb

University of Mannheim

Date Written: November 2019

Abstract

Economists have long argued that introducing social insurance will reduce fertility. The hypothesis relies on standard models: if children are desirable in part because they provide security in case of disability or old age, then state programs that provide insurance against these events should induce couples to substitute away from children in the allocation of wealth. We test this claim using the introduction of social insurance in Germany in the 1880s and 1890s. Bismarck’s social-insurance system provided health insurance, workplace-accident insurance, and old age pensions to a majority of the working population. The German case appeals because the social insurance program started on a large scale and was compulsory for covered classes of workers, and because fertility in Germany in this period was still relatively high. Focusing on the state of Prussia, we estimate differences-in-differences models that ask whether marriage and marital fertility reacted to the introduction or extension of the main social insurance programs. For Prussia as a whole we find little impact.

Keywords: Fertility transition, Marriage patterns, Old age pension, Health insurance, Accident insurance

JEL Classification: J12, J13, H55, N33

Suggested Citation

Guinnane, Timothy W. and Streb, Jochen, Bismarck to No Effect: Fertility Decline and the Introduction of Social Insurance in Prussia (November 2019). Yale University Economic Growth Center Discussion Paper No. 1069, 2019, Available at SSRN: https://ssrn.com/abstract=3497923 or http://dx.doi.org/10.2139/ssrn.3497923

Timothy W. Guinnane (Contact Author)

Yale University - Department of Economics ( email )

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HOME PAGE: http://sites.google.com/site/timothywguinnanec/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Jochen Streb

University of Mannheim ( email )

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Mannheim, 68131
Germany

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