Fertility decisions and pension reforms

Billari, Francesco C.; Galasso, Vincenzo

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Fertility decisions and pension reforms : evidence from natural experiments in Italy

Billari, Francesco C. Department of Sociology and Nuffield College, University of Oxford, United Kingdom
Galasso, Vincenzo Istituto di economia politica (IdEP), Facoltà di scienze economiche, Università della Svizzera italiana, Svizzera

2014

38 p.

English The emergence of old-age social security has been linked to general fertility decline, and in recent years pension reforms have emerged as a response to the challenges of population ageing, in turn partially a consequence of fertility decline. Understanding the link between social security and low fertility is therefore very important. In this paper we analyse the link between fertility and social security in a novel way. We exploit a series of pension reforms that were implemented in Italy, one of the first ‘lowest-low’ fertility societies, during the 1990s, to test the effect of expected retirement income on fertility. The design of the reforms, which introduced a discontinuity depending on the numbers of years of contributions, allows considering them as a natural experiment. We analyse fertility data reconstructed from a series of surveys from the Bank of Italy and show that couples in which the husband was affected by the reform, therefore facing a lower pension, had subsequently higher fertility.

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