Discussion paper

DP7014 What Explains Fertility? Evidence from Italian Pension Reforms

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.


Galasso, V and F Billari (2008), ‘DP7014 What Explains Fertility? Evidence from Italian Pension Reforms‘, CEPR Discussion Paper No. 7014. CEPR Press, Paris & London. https://cepr.org/publications/dp7014