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ResearchMay 12, 2014

How an Italian pension reform reduced fertility

In Southern European countries family ties are traditionally very strong. In Italy, three out of four individuals who already have children themselves meet with one of their parents at least once a week. And 42 percent of all grandparents see their grandchildren every day. They often look after the kids while the parents are working.

In a new IZA discussion paper Erich Battistin, Michele De Nadai and Mario Padula examine what happens when the elderly no longer have time to take care of their grandchildren. During the 1990s, Italy introduced a major pension reform, forcing individuals to work about five years longer. So for many Italians in their twenties, their parents were no longer available to take care of their offspring.

The researchers demonstrate that this pension reform had an effect on fertility. More precisely, they show that one more grandparent available to provide childcare makes young couples have on average five percent more kids. In other words, taking five families, and assigning each of them a grandparent to provide childcare, leads to one additional kid in one of the five families. For parents aged 30 and older, having a grandparent available also increases the likelihood of having kids by three percent. Especially in the South, where family ties are said to be stronger, these results are only weakly affected by the availability of childcare in kindergartens.

Since the results are not influenced by the wealth of the family either, the researchers conclude that preferences and social norms are the driving forces behind the fertility effect. They raise concerns that the pension reform had unintended intergenerational effects, reducing the fertility of young Italians.

Mentioned Papers

IZA Discussion Paper No. 8071 Roadblocks on the Road to Grandma's House: Fertility Consequences of Delayed Retirement Erich Battistin, Michele De Nadai, Mario Padula

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  • childcare
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