The old-age-security hypothesis is an economic hypothesis according to which parents view their children as a source of income and personal services in old age. Within the framework of this hypothesis, the demand for children is considered as the need to ensure a safe old age. As a consequence, increasing the profitability of alternative assets or introducing a universal public pension system reduces the demand for children.
Description According to this hypothesis, the presence of a state pension system reduces the overall birth rate and hinders investment in the human capital of children, which in the long term leads to a decrease in the size of the working-age population and affects their overall income growth. On the contrary, the absence of alternative assets or state pension provision makes it necessary to have children.
This hypothesis is based on two basic assumptions: people control the number of children born and people in their actions are guided by selfish motives (that is, proceeding only from their own consumption throughout life). According to this hypothesis, payments from children to support their elderly parents are seen as a return on loans that parents spent to provide for their children in childhood.
Alternative hypotheses explaining the birth rate are intergenerational altruism and various hypotheses related to the labor market.
The earliest mention of the inverse relationship between the birth rate and the level of the population's pension is found in Leibenstein in 1957. Van Groezen, Leers and Meijdam in 2003, Sinn in 2007, Cigno and Werding in 2007, Ehrlich and Kim in 2007, Van Groezen and Meijdam in 2008, Gahvari in 2009, Cigno in 2010, expressed the opinion about the decline in the birth rate as a consequence of the introduction of the pension system. Fenge and von Weizsäcker in 2010, Regös in 2014, Boldrin, De Nardi and Jones in 2015. Guinnane in 2011, based on empirical evidence of declining fertility in historical time, considered the introduction of social protection as one of the reasons for the first demographic transition. Cigno and Rosati in 1992, Cigno in 2003, Billari and Galasso in 2009 examined this hypothesis at the level of specific countries and individual pension systems. Cigno and Werding in 2007 gave an overview of work on the relationship between pensions and fertility in the modern period. According to these studies, a smaller pension coverage leads to a higher birth rate.
Alessandro Cigno
According to Alessandro Cigno, ensuring old age is an incentive for raising children and a dominant factor in increasing the birth rate. Cigno also believes that it has been proven that the coverage of the population by the pension system reduces the birth rate, although it increases household savings. In his opinion, the state pension system prevents parents from investing in the human capital of their children. Considering the rapidly aging population and the imbalance between the number of recipients of pensions and those who pay pension contributions as the reason for the deficit of the pension fund and the decrease in the income of pensioners, Alessandro Cigno proposes to pay the pension to parents directly from the pension contributions of their children.
Robert Fenge and Beatrice Scheubel
In 2017, Robert Fenge and Beatrice Scheubel published an article Pensions and fertility: back to the roots, where they studied the relationship between the development of the state pension system, or rather the dynamics of the share of people participating in pension insurance programs and the dynamics of fertility, using the example of the German Empire at the end of 19 and beginning 20th century. In addition to pensions, the multivariate analysis took into account those factors that scientists usually cite as the cause of the first demographic transition. Together with pensions, the impact of factors such as literacy and urbanization was analyzed. According to Robert Fenge and Beatrice Scheubel, the introduction of pensions in Germany at the turn of the 19th and 20th centuries explains up to 15% of the decline in the birth rate in 1895–1907.
UN Conference on the World Population in Bucharest, 1974
A meeting dedicated to the reduction of the world population was held in Bucharest from August 19 to 30. Participants: more than 1.4 thousand delegates from 136 countries (at that time there were 138 countries in the UN, family planning is already being promoted in 59 countries). Initiator: The USA and the UN.
The plan was written in advance, it was mainly developed by the American side, initially contained quantitative target indicators for the CPR (Controlled Population Reduction) for individual countries, but as a result of the protests they had to be removed. It was the first official international document in the field of demography and fertility reduction.Betsy Hartmann POPULATION CONTROL I: BIRTH OF AN IDEOLOGY International Journal of Health Services Vol. 27, No. 3 (1997), pp. 523-540 (18 pages)
The Conference is proud for the first time in history, setting the goal of "curbing population growth" for the peoples. And also worked out specific ways to achieve this Goal. Among them is the introduction of benefits and pensions.
"Recognizing the diversity of social, cultural, political and economic conditions, everyone agrees that the following development goals will lead to a moderate birth rate: reduction of infant and child mortality, full involvement of women in the development process (education, economics, politics), promotion of social justice, accessibility of education, eradication of child labor and abuse with children, the introduction of social security and old-age pensions, the establishment of a minimum age for marriage."Report of the United Nations World Population Conference, 1974, Bucharest, 19 -- 30 August 1974
By this time, demographic policy and "family planning" programs had been successfully applied in Asian countries, in particular in India, Japan, Pakistan and Sri Lanka. In 1974, teaching staff worked in 39 countries, in which about 80% of the population of the "developing world" lived.
Barbara Entwistle Here is how the author explains the purpose of his work: In 1974, a meeting took place in Bucharest, which resulted in the adoption of an Action Plan for the World Population. It is strongly recommended to introduce everywhere school education and pensions in order to benefit the population, as well as to reduce its number.
Because in America it was already generally accepted that pensions and education lower fertility. And to check the correctness of this opinion, its effectiveness (degree of impact) and applicability to different countries, as well as the predictions made earlier, Barbara just carried out this huge work.Entwisle B.D Еducation, pension programs, and fertility: a cross-national investigation, with special reference to the potential held by education and pension programs as fertility reduction policies p. 257
About previous studies. On page 258, the author mentions previous studies of the dependence of fertility on pensions and education, these are: McGreevy and Birdsall (1974), and the Triangle Research Institute (1971), as well as Kirk (1971), Kasarda (1971), Adelman (1963), Friedlander and Silver (1967) and Beaver (1975). and others, at least 15. They showed very different results, from zero correlation to significant (higher than the statistical error). Light was shed by the study of Friedlander and Silver (1967), where they first explored the whole world, but then developed and developing countries separately, and it turned out that the negative impact of education on fertility is indeed significant in developing countries, but practically zero in developed countries.
These studies used different criteria for education (for example: literacy, school enrollment, circulation of newspapers, etc.), included a different number of variables (i.e., a unified method for calculating dependence has not yet been developed), and Barbara comes to the conclusion that correlation becomes significant when the study includes 4–5 variables, in other words, when education is complemented by something else. (p. 261)
Beaver (1975) finds that the effect of education on fertility is more pronounced in TFR but not OCD because TFR is an age-standardized unit of measure. But the difference in results is still small. The same is indicated by the studies of Adelman (1963) and Janowitz (1971). Another interesting finding from Beaver is that education has an effect on OCD with a lag of 12.5 years, but not 7.5 years. (This conclusion of Beaver is not supported by Barbara's own research, she found no dependence on lags of 5, 10 and 15 years.) (P. 262)
Opportunities for education have skyrocketed around the world since World War II, says Barbara. Other studies of the dependence of fertility on education, using, like Beaver, data for the 1950s - early 1960s (for example, Ekanem, 1972), found no relationship between them. (p. 263)
So the question of the dependence of fertility on education remains unclear, although it has been comprehensively and in detail discussed. On this, with education, Barbara ends and moves on to pensions.
Friedlander and Silver (1967) were the first to introduce pensions into country comparisons. They found a significant influence of this factor (pensions), both for developed and developing (especially developing) countries, which was not found according to earlier data from 1960. (pp. 263–264). Holm (1975), in contrast to Friedlander and Silver, already finds a significant negative correlation between fertility and pension coverage, possibly due to the fact that more recent data from the mid-1960s are used. The size of the pension has very little effect on the birth rate. (p. 264).
Kelly, Cutwright, and Hittle (1976) criticized Holm (1975) for not taking into account the so-called. modernization, they argued that the drop in the birth rate does not actually correlate with pensions, but with modernization, and with the introduction of the modernization coefficient they created, the impact of pensions was already insignificant. (p. 265)
Holm responded with a paper (1976), where he analyzed the correlation of fertility and another indicator, the percentage of government spending on pensions from the GDP of that state, and on a larger sample of countries. She confirmed the pension hypothesis (that pensions reduce the birth rate), even with the inclusion of this modernization index. (These results are consistent with those of Barbara's dissertation in Chapters 5 and 6.) Again, Holm's work shows a stronger negative effect of pensions on fertility in developing countries, especially in the early 1960s (p. 265).
Barbara mentions 4 more studies, which gave the same result as hers, but her work is more detailed, because it shows that pensions affect not only the birth rate, but also the rate at which it declines, that pensions have a delayed effect, and that this effect increased during the 1960s. Initially, the effect (of lower fertility due to pensions) was more pronounced in developing countries, but the difference faded as they developed over a 10-year period. (p. 266)