Tuesday, November 11

Less pensions, more children

My father's father ended up having 18 children, my father's mother belonged to a group of 12 siblings, my wife's grandpa punched out 14 odd kids and so on and so forth. At that time and age, children were considered to be god's gift, and a man's virility was considered to be measured by the number of children he had. Plus mix in the fact that there was no good birth control and no safety net, meant that there were tons of kids. But does this mean that this is the case this time and age?

Well, interestingly enough, there was this case in Italy where pensions were reformed. This reform meant that pension benefits were dramatically reduced. So if the theory holds right, then you will see a jump in the fertility of women and the number of children which are born will increase. And so this paper so determined. I quote:

simple comparison shows that unaffected individuals had on average 1.7 children, while affected individuals had on average 1.87 children. The magnitude of this difference is reduced once one controls for factors such as individuals’ age, but a difference of about 13% higher post-reform fertility remains. These empirical results are consistent with the “kids as investment good” rather than “consumption” motivation, even in modern societies. They are also consistent with the link between the expansion of pay-as-you-go pension systems and lower fertility – in this case the retrenchment of a pay-as-you-go pension system induces higher fertility.

Hmm, so when you reduce future benefits like pensions, you will see people punching out more kinds. Interesting or what? Perhaps I should try to float this idea to have more kids :).

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