The effects of financial markets and social security on saving and fertility behaviour in Italy

Abstract

"This paper outlines the relevant theory and presents some empirical evidence on the effects of capital market developments and social security coverage on fertility and saving behaviour in Italy.... The data examined appear to lend support to the hypothesis that saving and fertility are jointly determined. They also show that the availability and attractiveness of market-based or state-provided alternatives to the family as a provider of old-age support significantly and systematically affect the saving and reproductive decisions of individuals." The data cover the period 1931-1987.

Fertility choice and financial development

“…We show that high real interest rates have a significant negative influence on fertility, a fact which can be easily reconciled with our theoretical approach. These results extend those obtained by Cigno andRosati (1992, 1996) on data for Germany, Italy, the UK and USA. Various checks of robustness substantially confirm our theory that the structure of private financial markets does matter for fertility choices and help explaining the historical decreasing trend of fertility in LDCs and MDCs which has taken place after the demographic transition.…”

“…On the theoretical level, a life-cycle model integrating fertility choices and financial markets is lacking. Cigno and Rosati (1992) investigate the effects of households' access to capital markets on fertility. They put forward two models of life-cycle fertility, finding empirical support for a positive effect of financial development on fertility.…”

Optimal social security in a dynastic model with investment externalities and endogenous fertility

“…Thus, if α is large enough relative to ρ, then a rise in the tax rate will reduce fertility. This negative net effect of social security on fertility is consistent with empirical evidence in the literature (e.g., Cigno and Rosati, 1992;Zhang and Zhang, 2004). …”

Economic growth and business cycles

“…Cigno and Rosati (1992) study saving and fertility behaviour in Italy and their empirical findings support the hypothesis that individual behaviour is motivated by self-interest rather than intergenerational altruism. Similar iindings are obtained in a more recent study for Germany, Italy, U.K. and U.S. (Cigno and Rosati 1996).…”