Journal of Population Economics

, Volume 30, Issue 1, pp 93–139 | Cite as

Pensions and fertility: back to the roots

Bismarck’s Pension Scheme and the first demographic transition
Original Paper

Abstract

Fertility has long been declining in industrialised countries and the existence of public pension systems is considered as one of the causes. This paper provides detailed evidence on the mechanism by which a public pension system depresses fertility, based on historical data. Our theoretical framework highlights that the effect of a public pension system on fertility is ex ante ambiguous while its size is determined by the internal rate of return of the pension system. We identify an overall negative effect of the introduction of pension insurance on fertility using regional variation across 23 provinces of Imperial Germany in key variables of Bismarck’s pension system, which was introduced in Imperial Germany in 1891. The negative effect on fertility is robust to controlling for the traditional determinants of the first demographic transition as well as to other policy changes.

Keywords

Public pension Fertility Transition theory Historical data Social security hypothesis European fertility decline PAYG pension scheme 

JEL Classification

H31 H53 H55 J13 J18 J26 N33 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of RostockRostockGermany
  2. 2.European Central BankFrankfurt am MainGermany
  3. 3.CESifoMunichGermany

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