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Monday, Oct 20
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psc brown bag iconWhat Explains Fertility? Evidence from Italian Pension Reforms

Francesco Billari (Director, Dondena Centre for Research on Social Dynamics, University of Bocconi, Milano, Italy)

03/02/2009, at noon in room 6050 ISR-Thompson.

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.


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