Investing for the Old Age : Pensions, Children and Savings

In the last century, most countries have experienced both an increase in pension spending and a decline in fertility. We argue that the interplay of pension generosity and development of capital markets is crucial to understand fertility decisions. Since children have traditionally represented for p...

Full description

Bibliographic Details
Main Authors:	Galasso, Vincenzo, Gatti, Roberta, Profeta, Paola
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Personal Finance D140 Macroeconomics: Consumption Saving Wealth E210 Social Security and Public Pensions H550 Demographic Trends and Forecasts General Migration J110 Fertility Family Planning Child Care INTERDISCIPLINARY RESEARCH AREAS :: Children Youth J130
Online Access:	http://hdl.handle.net/10986/5760

id	okr-10986-5760
recordtype	oai_dc
spelling	okr-10986-57602021-04-23T14:02:23Z Investing for the Old Age : Pensions, Children and Savings Galasso, Vincenzo Gatti, Roberta Profeta, Paola Personal Finance D140 Macroeconomics: Consumption Saving Wealth E210 Social Security and Public Pensions H550 Demographic Trends and Forecasts General Migration J110 Fertility Family Planning Child Care INTERDISCIPLINARY RESEARCH AREAS :: Children Youth J130 In the last century, most countries have experienced both an increase in pension spending and a decline in fertility. We argue that the interplay of pension generosity and development of capital markets is crucial to understand fertility decisions. Since children have traditionally represented for parents a form of retirement saving, particularly in economies with limited or nonexistent capital markets, an exogenous increase of pension spending provides a saving technology alternative to children, thus relaxing financial (saving) constraints and reducing fertility. We build a simple two-period OLG model to show that an increase in pensions is associated with a larger decrease in fertility in countries in which individuals have less access to financial markets. Cross-country regression analysis supports our result: an interaction between various measures of pension generosity and a proxy for the development of financial markets consistently enters the regressions positively and significantly, suggesting that in economies with limited financial markets, children represent a (if not the only) way for parents to save for old age, and that increases in pensions amount effectively to relaxing these constraints. 2012-03-30T07:34:24Z 2012-03-30T07:34:24Z 2009 Journal Article International Tax and Public Finance 09275940 http://hdl.handle.net/10986/5760 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Personal Finance D140 Macroeconomics: Consumption Saving Wealth E210 Social Security and Public Pensions H550 Demographic Trends and Forecasts General Migration J110 Fertility Family Planning Child Care INTERDISCIPLINARY RESEARCH AREAS :: Children Youth J130
spellingShingle	Personal Finance D140 Macroeconomics: Consumption Saving Wealth E210 Social Security and Public Pensions H550 Demographic Trends and Forecasts General Migration J110 Fertility Family Planning Child Care INTERDISCIPLINARY RESEARCH AREAS :: Children Youth J130 Galasso, Vincenzo Gatti, Roberta Profeta, Paola Investing for the Old Age : Pensions, Children and Savings
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	In the last century, most countries have experienced both an increase in pension spending and a decline in fertility. We argue that the interplay of pension generosity and development of capital markets is crucial to understand fertility decisions. Since children have traditionally represented for parents a form of retirement saving, particularly in economies with limited or nonexistent capital markets, an exogenous increase of pension spending provides a saving technology alternative to children, thus relaxing financial (saving) constraints and reducing fertility. We build a simple two-period OLG model to show that an increase in pensions is associated with a larger decrease in fertility in countries in which individuals have less access to financial markets. Cross-country regression analysis supports our result: an interaction between various measures of pension generosity and a proxy for the development of financial markets consistently enters the regressions positively and significantly, suggesting that in economies with limited financial markets, children represent a (if not the only) way for parents to save for old age, and that increases in pensions amount effectively to relaxing these constraints.
format	Journal Article
author	Galasso, Vincenzo Gatti, Roberta Profeta, Paola
author_facet	Galasso, Vincenzo Gatti, Roberta Profeta, Paola
author_sort	Galasso, Vincenzo
title	Investing for the Old Age : Pensions, Children and Savings
title_short	Investing for the Old Age : Pensions, Children and Savings
title_full	Investing for the Old Age : Pensions, Children and Savings
title_fullStr	Investing for the Old Age : Pensions, Children and Savings
title_full_unstemmed	Investing for the Old Age : Pensions, Children and Savings
title_sort	investing for the old age : pensions, children and savings
publishDate	2012
url	http://hdl.handle.net/10986/5760
_version_	1764396206242398208

Investing for the Old Age : Pensions, Children and Savings

Similar Items