Fertility decisions and pension reforms. Evidence from natural experiments in Italy

The emergence of old-age social security has been linked to general fertility decline, and in recent years pension reforms have emerged as a response to the challenges of population ageing, in turn partially a consequence of fertility decline. Understanding the link between social security and low fertility is therefore very important. In this paper we analyse the link between fertility and social security in a novel way. We exploit a series of pension reforms that were implemented in Italy, one of the first ‘lowest-low’ fertility societies, during the 1990s, to test the effect of expected retirement income on fertility. The design of the reforms, which introduced a discontinuity depending on the numbers of years of contributions, allows considering them as a natural experiment. We analyse fertility data reconstructed from a series of surveys from the Bank of Italy and show that couples in which the husband was affected by the reform, therefore facing a lower pension, had subsequently higher fertility.