Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154167
Authors: 
Fenge, Robert
Scheubel, Beatrice
Year of Publication: 
2014
Series/Report no.: 
ECB Working Paper 1734
Abstract: 
Fertility has long been declining in industrialised countries and the existence of public pension systems is considered as one of the causes. This paper provides detailed evidence based on historical data on the mechanism by which a public pension system depresses fertility. Our theoretical framework highlights that the effect of a public pension system on fertility works via the impact of contributions in such a system on disposable income as well as via the impact on future disposable income that is related to the internal rate of return of the pension system. Drawing on a unique historical data set which allows us to measure these variables at a jurisdictional level for a time when comprehensive social security was introduced, we estimate the effects predicted by the model. We find that beyond the traditional determinants of the first demographic transition, a lower internal rate of return of the pension system is associated with a higher birth rate. This result is robust to including the traditional determinants of the first demographic transition as controls as well as to other policy changes at the time.
Subjects: 
fertility
first demographic transition
historical data
public pension
social security hypothesis
transition theory
JEL: 
C21
H31
H53
H55
J13
J18
J26
N33
ISBN: 
978-92-899-1142-9
Document Type: 
Working Paper

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