Growing old and staying young: population policy in an ageing closed economy

This paper analyses the relation between public pensions, fertility and child care in a closed-economy overlapping generations model with endogenous fertility. It is shown that raising a child involves two social externalities and that it is optimal to introduce child allowances if the government redistributes income from the young to the old. The optimal child allowance rises when longevity increases. If the costs of raising children depend positively on the wage, a third externality arises and the returns to savings should be taxed.

Child mortality, fertility, and human capital accumulation

This article analyzes the impact of decline in child mortality on fertility and economic growth. The study shows that the timing of mortality relative to education is crucial to implications of mortality decline. If child mortality is realized before education starts, an exogenous decline in child mortality leads to a decline in education—a finding that is opposite to those of studies that considered a decline in mortality after the cost of education has been incurred. The work also demonstrates the role of parental human capital in reducing child mortality and the causal link between rising education and declining child mortality.

The earned income tax credit and fertility

Government programs designed to provide income safety nets often restrict eligibility to families with children, creating an unintended fertility incentive. This paper considers whether dramatically changing incentives in the earned income tax credit affect fertility rates in the USA. We use birth certificate data spanning the period 1990 to 1999 to test whether expansions in the credit influenced birthrate among targeted families. While economic theory would predict a positive fertility effect of the program for many eligible women, our results indicate that expanding the credit produced only extremely small reductions in higher order fertility among white women.

On the political economy of social security and public education

This paper analyzes simultaneous voting on the wage tax rate and investment in public education with three overlapping generations and ability differences inside each cohort. Wage tax revenue finances public education and social security benefits. The presence of ability differences introduces a time-consistency problem with repeated voting. This can be solved by trigger strategies, which do not punish upward deviations in the wage tax rate. If there are multiple equilibria, then higher tax rates are associated with more education. Surprisingly, the median voter may be a young citizen, even when cohorts are of the same size.

The influence of market wages and parental history on child labour and schooling in Egypt

This paper examines the influence of adult market wages and having parents who were child labourers on child labour, when this decision is jointly determined with child schooling, using data from Egypt. The empirical results suggest that low adult market wages are key determinants of child labour; a 10% increase in the illiterate male market wage decreases the probability of child labour by 22% for boys and 13% for girls. The findings also indicate the importance of social norms in the intergenerational persistence of child labour: parents who were child labourers themselves are on average 10% more likely to send their children to work. In addition, higher local regional income inequality increases the likelihood of child labour.

Population Density is a Key Factor in Declining Human Fertility

In studying the complex determinants of human fertility, social scientists have given little attention to population density, although reproduction has been shown to be density-dependent for a wide variety of other species. Using fixed effects models on the time series of 145 countries and controlling for key social and economic variables, we find a consistent and significant negative relationship between human fertility and population density. Moreover, we find that individual fertility preferences also decline with population density. These findings suggest that population density should be included as a variable in future studies of fertility determinants.

The effect of longevity on schooling and fertility: evidence from the Brazilian Demographic and Health Survey

This paper presents microevidence on the effect of adult longevity on schooling and fertility. Higher longevity is systematically associated with higher schooling and lower fertility. The paper looks at the 1996 Brazilian Demographic and Health Survey and constructs an adult longevity variable based on the mortality history of the respondent's family. Families with histories of high adult mortality in previous generations have systematically higher fertility and lower schooling. These effects are not associated with omitted variables and remain unchanged after a large array of factors is accounted for (demographic characteristics, family-specific child mortality, regional development, socioeconomic status, etc.).

A dynamic general equilibrium analysis of the political economy of public education

The primary objective of this paper is to highlight the distinct roles of altruism and of self-interest in the political determination of a public education policy. I assess the relative importance of three factors in the determination of the equilibrium level of this policy: altruism, the impact of public funding of education on social security benefits, and its impact on factor prices. I then focus on the impact of implementing a social security system on the equilibrium levels of education funding and on welfare. I find that although in the benchmark economy, the presence of social security might generate support for public funding of education, its overall effect on the well-being of individuals is negative for any level of social security taxation.

Sibling size and investment in children’s education: an asian instrument

This study estimates the trade-off between child quantity and quality by exploiting exogenous variation in fertility under son preferences. Under son preferences, both sibling size and fertility timing are determined depending on the first child’s gender, which is random as long as parents do not abort girls at their first childbearing. For the sample South Korean households, I find strong evidence of unobserved heterogeneity in preferences for child quantity and quality across households. The trade-off is not as strong as observed cross-sectional relationships would suggest. However, even after controlling for unobserved heterogeneity, a greater number of siblings have adverse effects on per-child investment in education, in particular, when fertility is high.

Are young cohorts of women delaying first birth in Mexico?

In the last decades, female permanent sterilisation became the most used method of contraception in Mexico. During this time, the demand for pills, condoms and other short-term contraceptives fell consistently. The shift in the demand for contraceptives raises concerns among demographers that the timing of children may remain unchanged regardless of observed reductions in period fertility rates. This paper assesses such ideas in the context of the timing of a first child using duration models as the main analysis tool. Findings suggest that young cohorts of women are effectively delaying first birth relative to the experience of older generations.

The effects of family caps on the subsequent fertility decisions of never-married mothers

Family caps seek to reduce fertility among welfare recipients by denying additional cash assistance to recipients who have children while on welfare. A necessary condition for family caps to be an effective policy tool is that welfare recipients respond to financial incentives in making decisions that affect subsequent fertility outcomes. This paper uses data from the 2001 and 2004 panels of the Survey of Income and Program Participation (SIPP) to examine whether welfare mothers respond to the incentive provided by the Aid to Families with Dependent Children/Temporary Assistance to Needy Families (AFDC/TANF) system in determining whether or not to have a second child. The results show no evidence that family caps have an effect on the subsequent childbearing of never married women.

The impact of family policies on fertility in industrialized countries: a review of the literature

This paper examines the theoretical propositions and empirical evidence linking policies and fertility. More specifically, the analysis presented in this paper draws attention to the complex mechanisms that theoretically link policies and demographic outcomes: mechanisms that involve imperfect information and decisions that are rationally bound by very specific circumstances. As to the empirical evidence, studies provide mixed conclusions as to the effect of policies on fertility. While a small positive effect of policies on fertility is found in numerous studies, no statistically significant effect is found in others. Moreover, some studies suggest that the effect of policies tends to be on the timing of births rather than on completed fertility.

Can consumers detect lemons? An empirical analysis of information asymmetry in the market for child care

This paper tests adverse selection in the market for child care. A unique data set containing quality measures of various characteristics of child care provided by 746 rooms in 400 centers, as well as the evaluation of the same attributes by 3,490 affiliated consumers (parents) in the U.S., is employed. Comparisons of consumer evaluations of quality to actual quality show that after adjusting for scale effects, parents are weakly rational. The hypothesis of strong rationality is rejected, indicating that parents do not utilize all available information in forming their assessment of quality. The results demonstrate the existence of information asymmetry and adverse selection in the market, which provide an explanation for low average quality in the U.S. child care market.

Planned fertility and family background: a quantile regression for counts analysis

This paper examines how education and family background affect the fertility plans of young individuals in Mexico. Quantile regression for count data is used for the analysis. Results indicate that education and family structure affect planned fertility only at the tails of the conditional distribution. Education reduces planned fertility only among women with relatively strong preferences towards children. An absent father reduces planned fertility mostly at the bottom of the conditional distribution.

Population aging and legal retirement age

This paper analyzes the effects of population aging on the preferred legal retirement age. What is revealed is the crucial role that the indirect ‘macro’ effects resulting from a change in the legal retirement age play in the optimal decision. Two social security systems are studied. Under a defined contribution scheme, aging lowers the preferred legal retirement age. However, under a defined pension scheme, the retirement age is delayed. This result shows the relevance of correctly choosing the parameter affected by the dependency ratio in the design of the social security programme.

An Empirical Analysis of the Interrelationship between Components of the Social Quality Theoretical Construct

Social quality has been presented as a theory that can explain economic and social progress of the daily lives of a population. The components of social quality include: socio-economic security, social inclusion, social cohesion and social empowerment. The social quality perspective views people as interacting within collective identities that provide the contexts of self-realisation. The paper tests the social quality theory by focusing on the relationship between social inclusion and social cohesion, the notion of social relations, to socio-economic security using the context of the family as a facilitator of self-realisation. Using data from the Israel Social Survey 2003, six indicators of socio-economic security were analysed. There was a small but positive and significant relationship between social inclusion and socio-economic security. We found no relationship between socio-economic security and social cohesion. These findings tend to undermine those aspects of social quality theory which posit close connections between these elements on a conceptual level.

Pathways to Economic Security: Gender and Nonstandard Employment in Contemporary Japan

Compiling data from several government surveys, this article identifies key social indicators of economic security associated with nonstandard employment in Japan. Empirical trends of nonstandard employment are contextualized in the development of Japanese coordinated capitalism from the economic boom during the 1960s through the recession of the 1990s to the turn of the 21st Century. A case study of Japan, with its high relative and absolute numbers of nonstandard workers, can reveal what happens to economic security when neoliberalism increasingly encroaches on a highly regulated employment relations system. The dramatic increase of nonstandard employment, particularly among women, is rooted in the design of the institutional architecture supporting pillars of the Japanese employment system and its mode of regulation. Based on interviews and a review of labour laws, the article chronicles regulatory reform aimed at stimulating the growth of nonstandard employment as a cheap source of labor with few benefits and limited employment protections. The final section concludes with a proposal for reframing social policies to advance economic security in Japan.

Forecasting German mortality using panel data procedures

Reliable forecasts of life expectancies are of importance for the financial stability of social security systems and the life insurance industry. A discrete-time stochastic process and a continuous-time stochastic process are proposed to model the dynamics of German mortality rates from which life expectancies are calculated. More precisely, a panel data model is utilized, which distinguishes between a common time effect and a common age effect. The model is easy to fit, yields interpretable parameters, and allows for a simple analysis of the forecast error. The main applications of the model are the forecast of mortality rates—and the resulting life expectancies—and the pricing of mortality derivatives.

An Empirical Test of a Neo-Malthusian Theory of Fertility Change

Some neo-Malthusians regard fertility as being kept in check by scarcities and constraints and, conversely, as being raised by economic prosperity. Since out-migration to developed countries and the receipt of food aid from developed countries relax the constraints imposed by a country’s carrying capacity, both will have a positive effect on fertility rates in developing countries. Moreover, better economic prospects will also raise fertility, all other things equal. This article provides an empirical test of these hypotheses derived from a neo-Malthusian theory of fertility change. The results fail to confirm the theory and often contradict it.

Child Mortality and Environment in Developing Countries

This paper studies child mortality and fertility in 61 developing countries including the Central Asian Republics (CARs). To control for simultaneity, an estimated value of fertility was used in the mortality equation and a final specification included only exogenous socio-economic, health and environmental variables. We confirm the importance of female literacy in explaining both fertility and mortality, and also find a measure of consumption for the poorest share of the population to be significant, while controlling for nutrition, health expenditure, and income distribution. Incidence of tuberculosis and female agricultural population proxy for environmental impacts, but in spite of these controls, approximately 41% additional mortality was estimated due to living in the CARs. The results fill gaps in the literature: we use a wider range of socio-economic and environmental health variables than previously in an encompassing analysis of mortality and fertility, and find evidence of excessive mortality in the CARs most likely linked to environmental degradation in the region.