Strategic transfers, redistributive fiscal policies, and family bonds: a micro-economic analysis

This paper presents a micro-economic model to analyze intergenerational exchange in which the utility maximizing decisions of “selfish” children on family services, labor market activities, and leisure are determined endogenously. We show that altruistic parents’ financial transfers have a disincentive effect on the labor supply of their children and that the children’s equilibrium income is positively correlated with parental income. Based on the theoretical model, we find that redistributing US$1 from children to their parents increases parental transfers by less than US$1, implying that intergenerational public transfers are Ricardian non-neutral. However, the non-neutral redistributive transfers may enhance intergenerational family bonds because the equilibrium levels of services rendered by children to their parents increase.     

Intergenerational transfers in industrialised countries

Estimates of the direction of net intergenerational transfers for Britain and Japan indicate that they are from younger to older generations. The estimates are similar to those for the USA by Lee and Lapkoff (1988). In the absence of capital dilution effects, because of these transfers, higher fertility would increase lifetime consumption in these countries. The strength of the transfer effect is somewhat higher for Japan than Britain or the USA, primarily because of longer life expectancy among the Japanese.I am grateful for the help of Professor Naohiro Ogawa and his colleagues at the Nihon University Population Research Institute (NUPRI), who were instrumental in compiling the data for Japan used in the calculations in the paper, which was partly written while I was a visiting research fellow at NUPRI. They are not, however, responsible for the use I have made of the data and their help.     

The effect of divorce on intergenerational transfers: New evidence

This paper draws on new data on intergenerational transfers of time and money that were collected in the Panel Study of Income Dynamics. We use these data to examine the effects of divorce on these transfers. We find that the timing of divorce is critical. Fathers and mothers involved in late divorces have similar levels of transfers with their adult children, while divorce during a child’s childhood years increases transfers with mothers and sharply lowers them with fathers. Somewhat surprisingly, we find no evidence that divorced fathers who paid child support are more likely to be involved in intergenerational transfers than those who did not pay child support.     

Unconditional government social cash transfer in Africa does not increase fertility

Among policymakers, a common perception surrounding the effects of cash transfer programmes, particularly unconditional programmes targeted to families with children, is that they induce increased fertility. We evaluate the Zambian Child Grant Programme, a government unconditional cash transfer targeted to families with a child under the age of 5 and examine impacts on fertility and household composition. The evaluation was a cluster randomized control trial, with data collected over 4 years from 2010 to 2014. Our results indicate that there are no programme impacts on overall fertility. Our results contribute to a small evidence base demonstrating that there are no unintended incentives related to fertility due to cash transfers.     

A global perspective on happiness and fertility

The literature on fertility and happiness has neglected comparative analysis. We investigate the fertility/happiness association using data from the world values surveys for 86 countries. We find that, globally, happiness decreases with the number of children. This association, however, is strongly modified by individual and contextual factors. Most importantly, we find that the association between happiness and fertility evolves from negative to neutral to positive above age 40, and is strongest among those who are likely to benefit most from upward intergenerational transfers. In addition, analyses by welfare regime show that the negative fertility/ happiness association for younger adults is weakest in countries with high public support for families, and the positive association above age 40 is strongest in countries where old-age support depends mostly on the family. Overall these results suggest that children are a long-term investment in well-being, and highlight the importance of the life-cycle stage and contextual factors in explaining the happiness/fertility association.     

Healthy Grandparenthood: How Long Is It,and How Has It Changed?

Healthy grandparenthood represents the period of overlap during which grandparents and grandchildren can build relationships, and grandparents can make intergenerational transfers to younger kin. The health of grandparents has important implications for upward and downward intergenerational transfers within kinship networks in aging societies. Although the length of grandparenthood is determined by fertility and mortality patterns, the amount of time spent as a healthy grandparent is also affected by morbidity. In this study, we estimate the length of healthy grandparenthood for the first time. Using U.S. and Canadian data, we examine changes in the length of healthy grandparenthood during years when grandparenthood was postponed, health improved, and mortality declined. We also examine variation in healthy grandparenthood by education and race/ethnicity within the United States. Our findings show that the period of healthy grandparenthood is becoming longer because of improvements in health and mortality, which more than offset delays in grandparenthood. Important variation exists within the United States by race/ethnicity and education, which has important implications for family relationships and transfers.     

On the dynamics of the age structure,dependency, and consumption

We examine the effects of population aging due to declining fertility and rising elderly life expectancy on consumption possibilities in the presence of intergenerational transfers. Our analysis is based on a highly tractable continuous-time overlapping generations model in which the population is divided into three groups (youth dependents, workers, and elderly dependents) and lifecourse transitions take place in a probabilistic fashion. We show that the consumption-maximizing response to greater longevity in highly developed countries is an increase in fertility. However, with larger transfer payments, the actual fertility response will likely be the opposite, leading to further population aging.     

Parental marital disruption and intergenerational transfers: An analysis of lone elderly parents and their children

Although one of the most marked demographic trends observed over the twentieth century is the increased rate of divorce, relatively little research has explored the effects of these changing marital patterns in the context of an aging society. Using a sample of lone elderly parents and their adult children, we analyze the direct and indirect effects of marital disruption on four important dimensions of intergenerational transfers: coresidence, financial assistance, adult children's provision of informal care, and parental purchase of paid care. Our findings suggest that divorce has deleterious effects on intergenerational transfers, particularly for elderly fathers. Remarriage further reduces exchange. Our results reveal that parents engage in lower levels of transfers with stepchildren relative to biological children. Moreover, intergenerational transfers are sensitive to characteristics of biological children but not to those of stepchildren. Taken together, these results suggest that exchange at the end of the life course continues to be adversely affected by marital disruption.     

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.     

Immigration to the UK from High‐Fertility Countries: Intergenerational Adaptation and Fertility Convergence

The fertility of immigrants' children increasingly shapes the ethnic diversity of the population in Western Europe. However, few data are available on the fertility patterns of immigrants and their offspring. This article provides new fertility estimates of immigrants and immigrants' children by ethnic group in the United Kingdom that may provide better‐informed fertility assumptions for future population projection models. The impact of migration‐specific tempo effects on the period TFR of immigrants is analyzed. Among the results, intergenerational fertility transitions strongly contribute both to fertility convergence between ethnic groups and to fertility “assimilation” or “intergenerational adaptation” to the UK mainstream childbearing behavior. Ethnic fertility convergence, particularly marked for populations originating from high‐fertility countries, reflects in part decreasing fertility in sending countries and in part intergenerational adaptation to the UK mainstream. Higher educational enrollment of the daughters of immigrants may partly explain their relatively lower fertility.     

Intergenerational Transmission of Multipartner Fertility

Using data from administrative registers for the period 1970–2007 in Norway and Sweden, we investigate the intergenerational transmission of multipartner fertility. We find that men and women with half-siblings are more likely to have children with more than one partner. The differences are greater for those with younger versus older half-siblings, consistent with the additional influence of parental separation that may not arise when one has only older half-siblings. The additional risk for those with both older and younger half-siblings suggests that complexity in childhood family relationships also contributes to multipartner fertility. Only a small part of the intergenerational association is accounted for by education in the first and second generations. The association is to some extent gendered. Half-siblings are associated with a greater risk of women having children with a new partner in comparison with men. In particular, maternal half-siblings are more strongly associated with multipartner fertility than paternal half-siblings only for women.     

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     

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

The paper aims to ascertain the extent to which saving and fertility decisions are affected by the availability and attractiveness of market-based or state-provided alternatives to the family as a source of old-age support. Subordinately, the paper aims to bring evidence to bear on the assumption that fertility is endogenous and jointly determined with saving, and to test two alternative hypotheses about individual motivations. The saving and fertility implications of two alternative models of family choice — based one on the assumption of pure self-interest, the other on that of intergenerational altruism — are first derived theoretically. Saving and fertility equations are then estimated from Italian time-series data, using as explanatory variables the market rate of interest, the social security deficit, various measures of capital market accessibility and social security coverage, and a number of income and wage variables. Particularly worthy of note is the result that a fully-funded increase in social security coverage raises saving, while an increase in the social security deficit has the opposite effect. The empirical findings appear to support the assumption that fertility is endogenous and jointly determined with saving, and to favour the hypothesis that individual decisions are motivated by self-interest rather than intergenerational altruism. Some of the policy implications are briefly discussed in the concluding section.While retaining responsibility for any errors, the authors wish to thank Carlo Casarosa, Wolfram Richter, Ed Wolff and three anonymous referees for helpful comments. Financial support from MURST 40%, under national project Capitale, Capitale Umano, Sicurezza Sociale e Dinamiche Demografische Endogene, is gratefully acknowledged.     

Differential fertility and intergenerational mobility under private versus public education

We study differential fertility and intergenerational mobility in an overlapping-generations framework with skilled and unskilled individuals. Assuming unskilled parents are less productive in educating children, we show that they choose higher fertility but less investment for child education than skilled parents. Public education reduces the fertility gap but may increase intergenerational mobility under certain conditions. We also find very different responses of fertility differential and intergenerational mobility to a variation in a preference or technology parameter. As the ratio of skilled to working population rises towards its steady state, average income rises, average fertility falls, but income inequality first rises and then falls.     

Antecedents to contraceptive innovation: Evidence from rural Northern Thailand

A number of different causal mechanisms have been proposed to explain the onset of fertility declines in populations with previously uncontrolled fertility, but they have never been adequately tested. The present study identifies and tests five antecedents to family limitation practices in a sample of 755 currently married couples resident in rural Northern Thailand. The loglinear multiple regression models estimated indicate that couples in more developed districts, more modern couples, couples in which wives have more equal roles, couples believing that intergenerational wealth transfers favor children rather than their parents, and more wealthy couples, were all significantly more likely to be early adopters of contraception. Local development levels appeared to have the greatest net effects on the timing of adoption of fertility control. In addition, couples in areas where contraceptive services were more readily available were also significantly more likely to be contraceptive innovators, net of these five variables.     

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.     

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.     

International Fertility Change: New Data and Insights From the Developmental Idealism Framework

Many scholars have offered structural and ideational explanations for the fertility changes occurring around the world. This paper focuses on the influence of developmental idealism—a schema or set of beliefs endorsing development, fertility change, and causal connections between development and fertility. Developmental idealism is argued to be an important force affecting both population policy and the fertility behavior of ordinary people. We present new survey data from ordinary people in six countries—Argentina, China, Egypt, Iran, Nepal, and the United States—about the extent to which developmental idealism is known and believed. We ask individuals if they believe that fertility and development are correlated, that development is a causal force in changing fertility levels, and that fertility declines enhance the standard of living and intergenerational relations. We also ask people about their expectations concerning future trends in fertility in their countries and whether they approve or disapprove of the trends they expect. The data show widespread linkage in the minds of ordinary people between fertility and development. Large fractions of people in these six settings believe that fertility and development are correlated, that development reduces fertility, and that declines in fertility foster development. Many also expect and endorse future declines in fertility.     

Does the Completeness of a Household-Based Convoy Matter in Intergenerational Support Exchanges?

Based on the closeness of kinship relationships, a 4-layer household-based convoy is proposed for the study of intergenerational support exchanges. It first separates co-residing family members from non-coresiding family members with whom they have frequent contact and places them in the innermost and next-innermost circles of an individual’s convoy structure, respectively. Relatives and friends with whom there is frequent contact are then added as the third and outer-most circles. In principle, it is ideal to have a full four layers. However, in reality, most people miss one or more layers during the different stages of the life cycle. A probability sample with 1979 cases is used to investigate the effect of convoy incompleteness on intergenerational support exchanges. The research findings show that missing any one layer and missing both the third and fourth layers do not result in a significantly negative effect on the mean types of support exchanged. When individual types of support are examined one by one, the convoy structure works similarly but selectively. It works best for types of support involving more labor costs, less for those involving financial support, and least for those involving advice. In addition, it is noted that a multiple exchange strategy is used in intergenerational support exchanges.