Endogenous fertility,altruistic behavior across generations,and social security systems

The present paper explores the impact of an intergenerational externality on private fertility decisions, under a pay-as-you-go social security system. The analysis is performed in the framework of a steady state growth model, with overlapping generations. To explain why households have children, altruism between parents and children is assumed. Surprisingly, the effects of altruism are not symmetric. The private fertility decisions are optimal only if children love their parents, because children then make private transfers at exactly the right level.Comments of participants of a seminar on economic theory of Prof. K. Jaeger at Free University of Berlin at July 20, 1989, are gratefully acknowledged. I am indebted to Alessandro Cigno, Frank Klanberg and Elmar Wolfstetter for many helpful suggestions.     

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.

Fertility, child care outside the home, and pay-as-you-go social security

We examine the long-run effects of the pay-as-you-go (PAYG) social security scheme on fertility and welfare of individuals in an overlapping generations model, assuming that child-care services are available in the market. We show that the impact of a tax increase on fertility depends on the relative magnitudes of the standard intergenerational redistribution effect through the social security system, the (implicit) subsidy effect through tax-exemption of child rearing at home, and the price effect through changes in the relative price of market child care, and that if parental child-rearing time is inelastic, a tax cut could bring about a Pareto-improving allocation.

How does social security affect economic growth? Evidence from cross-country data

This paper investigates how social security interacts with growth and growth determinants (savings, human capital investment, and fertility). Our empirical investigation finds that the estimated coefficient on social security is significantly negative in the fertility equation, insignificant in the saving equation, and significantly positive in the growth and education equations. By contrast, the estimated coefficient on growth is insignificant in the social security equation. The results suggest that social security may indeed be conducive to growth through tipping the trade-off between the number and quality of children toward the latter.All correspondence to Junsen Zhang. We would like to thank the editor, two anonymous referees, Jim Davies, Frank Denton, Se-Jik Kim, and Mike McAleer for helpful comments and suggestions. Any remaining omissions and errors are the authors responsibility. Responsible editor: Alessandro Cigno.     

The Intergenerational Effect and Second Childbirth: Survey Findings from the Shaanxi Province of China

Traditionally, the fertility behaviors of Chinese people have been deeply influenced by the entrenched patriarchal, patrilineal, and patrilocal systems. Women’s fertility decisions and behaviors are significantly influenced by their parents and parents-in-law. Given the current social changes with low fertility levels and intentions in China, it is still unclear about the actual link between the fertility behavior and the intergenerational effect. Therefore, we utilize data from 1577 questionnaires, conducted in 2013 in the Shaanxi Province of northwest China about fertility intentions and behaviors, and use the event history analysis method and the Cox proportional hazard model to explore the association between intergenerational effects and women’s second childbirths. “The number of the parental generation’s children” and “the living arrangements of the parental generation” are employed to measure the intergenerational effect. The findings show that there is an existence of intergenerational transmission of fertility between women of childbearing age and their parents-in-law, rather than their biological parents when considering the effects of their parents-in-law. In addition, the study finds a significant correlation between women’s second childbirth and the living arrangements of their parents-in-law, but no significant association with the living arrangements of their biological parents. These results support that the patriarchal, patrilineal, and patrilocal systems play a role in women’s fertility behaviors in contemporary China.     

Self-interest and altruism in intergenerational relations

Self-interest and altruism in the relationships between generations can be manifested both within the family and in the public arena. The present study compares levels of support between age groups 40-49,50-59, 60-69, 70-79, and 80+ on a series of attitudes about “appropriate” parent-child relations and governmental programs for older people. On both kinds of measures, older people tend consistently to be least likely to adopt the “pro-elderly” position. This association is maintained when controls are introduced in multivariate analyses. Altruism, not self-interest, seems to govern the attitudes of the older generation in this sample. This finding should mitigate potential conflicts over issues of intergenerational equity and fairness, both within the family and in public policy.     

Endogenous fertility,endogenous lifetime and economic growth: the role of child policies

We examine the effects of child policies on both transitional dynamics and long-term demo-economic outcomes in an overlapping-generations neoclassical growth model à la Chakraborty (J Econ Theory 116(1):119–137, 2004) extended with endogenous fertility under the assumption of weak altruism towards children. The government invests in public health, and an individual’s survival probability at the end of youth depends on health expenditure. We show that multiple development regimes can exist. However, poverty or prosperity does not necessarily depend on the initial conditions, since they are the result of how a child policy is designed. A child tax, for example, can be used effectively to enable those economies that were entrapped in poverty to prosper. There is also a long-term welfare-maximising level of the child tax. We show that a child tax can be used to increase capital accumulation, escape from poverty and maximise long-term welfare also when (a) a public pay-as-you-go pension system is in place and (b) the government issues an amount of public debt. Interestingly, there also exists a couple child tax–health tax that can be used to find the second-best optimum optimorum. In addition, we show that results are robust to the inclusion of decisions regarding the child quantity–quality trade-off under the assumption of impure altruism. In particular, there exists a threshold value of the child tax below (resp. above) which child quality spending is unaffordable (resp. affordable) and different scenarios are in existence.     

Altruism and Market-Like Behavior: An Analysis of Willingness to Pay for Recycled Paper Products

The contrast between self-interested behavior guided by rational choice and altruistic behavior guided by normative considerations is a central theme in the social sciences. This study suggests that market and market-like behavior, the context where self-interest is expected to dominate, is in fact often motivated by altruism. This argument is tested by examining a willingness to pay measure, a surrogate for the market that is finding substantial use in analyses of public policy. In particular, the ability of the Schwartz model of altruism to explain willingness to pay for recycled products is examined. Findings indicate that even as the Schwartz model has explained many purely altruistic behaviors, it also can explain self-reported willingness to pay. While economists often have noted the importance of rational choice in even the most intimate of human decisions, this study notes the importance of normative altruism in even the most calculated.     

The macroeconomics of fertility in small open economies: A test of the Becker-Barro model for The Netherlands and New Zealand

Becker and Barro (1988) formulated a theoretical model which identified a range of macroeconomic variables which can temporarily or permanently affect fertility in small open economies. This article tests the Becker-Barro model with relevant data which covers most of the 20th century for two small open economies, namely The Netherlands and New Zealand. The results show that government subsidies for having children have a strong positive effect on fertility, while the provision of public pensions has a strong negative effect. The degree of intergenerational altruism appears to have been declining. Moreover, there is only weak support for the hypothesis that real interest rates positively influence fertility. Received: 2 March 1998/Accepted: 1 September 1999     

Transfers to the old,government debt and demographic change

In this paper we take the view that policy makers (representing the interests of the living generations in one way or another) take the relationship between (explicit) intergenerational transfer systems (including public pension schemes) and government deficits into account. It is assumed that policy makers are behaving altruistically towards past and future generations. Given the behavioral model, an analysis is made of the effects of demographic changes (such as the baby-boom of the 1940s and 1950s and the decline of birth rates in the 1970s) on the decisions to be taken with respect to the tax rate of the public pension system and the size of government debt. From the analysis it appears that, with the assumption of altruistic decision-makers, periods of increasing or decreasing debt can occur alternately in periods of demographic change.     

Children and pensions

Recent economic explanations of changes in fertility behaviour have focussed on the effects of labour-market-related incentives. The present paper draws attention to another set of incentives, those connected with the transfer of resources over time. The theoretical implications of intergenerational altruism as a possible motive for having children and making transfers to them are considered, and contrasted with those arising from the competing hypothesis that such actions are motivated by old-age-security considerations. From a comparison of these theoretical predictions with the findings of a number of empirical studies, it would appear that self-interested concern for one's old age, rather than any great love for future members of one's dynasty, is or has been so far the dominant force driving fertility and intergenerational transfers worldwide.Presidential Address to the European Society for Population Economics, Fifith Annual Conference, 6–8 June 1991, Pisa, Italy. the author is grateful to two anonymous referees for helpful comments, and to conference participants whoe intervened in the discussion, but retains full responsibility for any remaining errors or shortcomings.     

Optimal fertility under age-dependent labour productivity

In the so-called Rapport Sauvy (1962), the French demographer Alfred Sauvy argued that Wallonia’s fertility rate was socially suboptimal, and recommended a 20 % rise of fertility, on the grounds that a society with too low a fertility leads to a low-productive economy composed of old workers having old ideas. This paper examines how Sauvy’s intuition can be incorporated in the Samuelsonian optimal fertility model (Samuelson, Int Econ Rev 16:531–538, 1975). We build a four-period OLG model with physical capital and with two generations of workers (young and old), the skills of the latter being subject to some form of decay. We characterize the optimal fertility rate and show that this equalizes, at the margin, the sum of the capital dilution effect (Solow effect) and the labour age-composition effect (Sauvy effect) with the intergenerational redistribution effect (Samuelson effect). Numerical simulations show that it is hard, from a quantitative perspective, to reconcile Sauvy’s recommendation with facts. This leads us to examine other potential determinants of optimal fertility, by introducing technological progress and a more general social welfare function.     

Social security and fertility: An international perspective

A number of population scholars have asserted that social security programs such as old-age programs lead to decreased fertility levels because parents need not rely on children for "security" in old age. There is, however, a paucity of empirical data on the above. This paper analyzes 67 countries and shows that social security programs have a measurable negative effect on subsequent levels of fertility. In fact, the social security programs appear to have as much of an independent impact on fertility as do the traditional correlates of fertility (infant mortality, education and per capita income).     

代际利益均衡与社会保障制度的完善

本文认为分析代际利益均衡对于社会和谐具有重大意义,指出代际利益均衡是和谐社会的必然要求。代际利益均衡不能通过市场机制自发实现,只能通过社会保障制度来实现,因而代际利益均衡机制建设是社会保障制度建设的重要任务。最后分析了青少年、中青年及老年人三个代际间的利益均衡机制,从而推进社会保障制度的完善。     

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.

A Multigenerational View of Inequality

The study of intergenerational mobility and most population research are governed by a two-generation (parent-to-offspring) view of intergenerational influence, to the neglect of the effects of grandparents and other ancestors and nonresident contemporary kin. While appropriate for some populations in some periods, this perspective may omit important sources of intergenerational continuity of family-based social inequality. Social institutions, which transcend individual lives, help support multigenerational influence, particularly at the extreme top and bottom of the social hierarchy, but to some extent in the middle as well. Multigenerational influence also works through demographic processes because families influence subsequent generations through differential fertility and survival, migration, and marriage patterns, as well as through direct transmission of socioeconomic rewards, statuses, and positions. Future research should attend more closely to multigenerational effects; to the tandem nature of demographic and socioeconomic reproduction; and to data, measures, and models that transcend coresident nuclear families.     

The intergenerational transmission of fertility in contemporary Denmark: The effects of number of siblings (full and half), birth order,and whether male or female

Using the Danish Fertility Database, we investigate intergenerational fertility transmission, including the relationship between the number of children born to those aged 25 and 26 years in 1994 and the number of their full sibs and half-sibs. We find that the fertility behaviour of parents and their children is positively correlated, and that half-sibs and full sibs have broadly similar effects. We do not find, in this complete national population, the strong birth order effects reported in some earlier studies. Nor do we find evidence of a weakening of intergenerational fertility transmission over time, perhaps because the greater flexibility of lifestyles in this post-transitional phase provides the extended social space within which intergenerational continuities can manifest themselves. We show that members of large families are over-represented in subsequent generations - that they have far more kin than those from smaller families - and that intergenerational continuities in fertility behaviour play a substantial role in keeping fertility higher than it would be in the absence of such transmission.     

The intergenerational transmission of fertility in contemporary Denmark: the effects of number of siblings (full and half), birth order,and whether male or female

Using the Danish Fertility Database, we investigate intergenerational fertility transmission, including the relationship between the number of children born to those aged 25 and 26 years in 1994 and the number of their full sibs and half-sibs. We find that the fertility behaviour of parents and their children is positively correlated, and that half-sibs and full sibs have broadly similar effects. We do not find, in this complete national population, the strong birth order effects reported in some earlier studies. Nor do we find evidence of a weakening of intergenerational fertility transmission over time, perhaps because the greater flexibility of lifestyles in this post-transitional phase provides the extended social space within which intergenerational continuities can manifest themselves. We show that members of large families are over-represented in subsequent generations - that they have far more kin than those from smaller families - and that intergenerational continuities in fertility behaviour play a substantial role in keeping fertility higher than it would be in the absence of such transmission.     

On social security financial crisis

We indicate that financial crisis in social security programs might be endogenous because social security affects fertility and human capital's decisions and thus, the aggregate growth rate of the economy. These effects lead to an endogenous erosion of the financial basis of the PAYG social security program so that, as a consequence, the PAYG system is not sustainable and it requires continuous increases in the social security tax rate. I received helpful comments in an earlier version of this paper from G.S. Becker, Larry Sjaastad, two anonymous referees and participants at seminars at Pontificia Universidad Catolica de Chile and The University of Chicago. Remaining errors are my own responsibility. Responsible editor: Junsen Zhang.     

Why do English-speaking countries have relatively high fertility?

In broad terms, the division in Europe between countries with very low fertility and countries with sustainable fertility matches Esping-Anderson’s classification of the same countries into ‘conservative’ and ‘social democratic’ (Esping-Anderson 1990). A central difference between these two types relates to their preferred models of the family. The conservative countries hold more to the ‘breadwinner’ model of the family while the social democratic countries seek higher levels of gender equity within the family and in the workplace. State support in both conservative and social democratic countries is designed to be consistent with these differing views of the family. Would we then not expect fertility to be very low in Esping-Anderson’s third group of countries, the ‘liberal’ countries, essentially English-speaking countries? By the Esping-Anderson definition, liberal countries are notable for their lack of support for families from public sources. Instead, according to Esping-Anderson, families must rely upon market provision for the services that they may need to combine work and family and they must rely on market employment to generate the income required to support their children. Contrary to this theory, whether measured by contemporary cross-sectional fertility or completed cohort fertility, with the exception of Canada, English-speaking countries now have the highest fertility rates among the countries that were classified by Esping-Anderson. Given the strength of theoretical explanation that arises from comparative studies of fertility in Europe, the paper examines why fertility in English-speaking countries seems not to follow expectation.