Skip to main content

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.

This is a preview of subscription content, access via your institution.


  1. Abel A, Kotlikoff LJ (1988) Does the consumption of different age groups move together? A new non-parametric test of intergenerational altruism. NBER, Cambridge, Mass

    Google Scholar 

  2. Barro RJ (1974) Are government bonds net wealth? J Polit Econ 82:1095–1118

    Google Scholar 

  3. Becker GS (1981) A treatise on the family. Harvard University Press, Cambridge, Mass

    Google Scholar 

  4. Becker GS, Barro RJ (1988) A reformulation of the theory of fertility. Q J Econ 103:1–25

    Google Scholar 

  5. Cigno A (1991) Economics of the family. Clarendon Press, Oxford

    Google Scholar 

  6. Cigno A (1992) Children and pensions. J Popul Econ 5:175–183

    Google Scholar 

  7. Cigno A (1993) Intergenerational transfers without altruism: family, market and state. Eur J Polit Econ (forthcoming)

  8. Engle RF, Granger CWJ (1987) Co-integration and error-correction representation, estimation, and testing. Econometrica 55:271–276

    Google Scholar 

  9. Engle RF, Yoo BS (1987) Forecasting and testing in co-integrated systems. J Economet 37:143–159

    Google Scholar 

  10. Ermisch JF (1988) Econometric analysis of birth rate dynamics. J Hum Resources 23:563–575

    Google Scholar 

  11. Feldstein M (1980) International differences in social security and saving. J Publ Econ 14:225–244

    Google Scholar 

  12. Graham JW (1987) International differences in saving rates and the life cycle hypothesis. Eur Econ Rev 31:1509–1529

    Google Scholar 

  13. Hayashi F, Kotlikoff LJ (1989) Is the extended family altruistically linked? Direct test using micro data. NBER, Cambridge, Mass

    Google Scholar 

  14. Wildasin DE (1990) Non-neutrality of debt with endogenous fertility. Oxf Econ Papers 42:414–428

    Google Scholar 

Download references

Author information



Additional information

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.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Cigno, A., Rosati, F.C. The effects of financial markets and social security on saving and fertility behaviour in Italy. J Popul Econ 5, 319–341 (1992).

Download citation


  • Social Security
  • Capital Market
  • Financial Market
  • Policy Implication
  • Individual Decision