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The authors propose an empirical test of two alternative theories - children as "Consumption" vs. "Investment" good. They use as a natural experiment the Italian pension reforms of the 90s that introduced a clear discontinuity in the treatment across workers. This policy experiment is particularly well suited, since the "Consumption" motive predicts lower future pensions to reduce fertility, while the "Old-age security" to increase it. The empirical analysis identifies a clear and robust positive effect of less generous future pensions on post-reform fertility. These findings are consistent with "Old-age security" even for contemporary fertility.
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