CHILDREN AND PENSIONS

Recent economic explanations of changes in fertility behaviour have focussed on the effects of labour-market-related incentives. The present paper draws attention to another set of incentives, those connected with the transfer of resources over time. The theoretical implications of intergenerational altruism as a possible motive for having children and making transfers to them are considered, and contrasted with those arising from the competing hypothesis that such actions are motivated by old-age-security considerations. From a comparison of these theoretical predictions with the findings of a number of empirical studies, it would appear that self-interested concern for one's old age, rather than any great love for future members of one's dynasty, is or has been so far the dominant force driving fertility and intergenerational transfers worldwide.