TY - JOUR
T1 - The 'old age security hypothesis' reconsidered
AU - Nerlove, Marc
AU - Razin, Assaf
AU - Sadka, Efraim
N1 - Funding Information:
In this paper we consider the 'old age security hypothesis' which essentially views children as a capital good. In the words of Schultz (1974), 'children are ... the poor man's capital' in developing countries. Becker (1960) writes that 'it is possible that in the mid-nineteenth century children were a net producer's good, providing rather than using income'. Neher (1971) and Willis (1980) develop the idea that parents in less developed countries are motivated, in part, to bear and rear children because they expect children to care for them in old age. In particular, Willis develops a model in which output is assumed to be produced with labor alone, any consumption demand for children is ignored by assuming that parents' utility is solely a function of their own consumption of commodities, and transfers from one's own children are the only source of parents' consumption in old age. Neher's assumptions are similar. The 'old age security hypothesis' states that better access to capital markets unambiguously reduces the demand for children, because children are then less essential as a means of transferring income from the present to the future. For instance, Neher (1971) writes that '...the good asset (bonds) *The research on which this paper is based was supported by grants from the National Institute on Ageing to the University of Pennsylvama and the U.S.-Israel Binational Science Foundation to Tel-Aviv University. Nerlove's contribution was partially supported by the International Food Policy Research Institute. We wish to acknowledge the helpful comments of Philip Neher on an earher draft.
PY - 1985/8
Y1 - 1985/8
N2 - That the introduction of a means for transferring present to future consumption other than children in a developing country will reduce the rate of population growth is shown to depend crucially on the assumption that parents do not care about the numbers or the welfare of the children they have. When parents do care, the conclusion no longer unambiguously follows because the new means for providing for parents' old age leads to a positive income effect.
AB - That the introduction of a means for transferring present to future consumption other than children in a developing country will reduce the rate of population growth is shown to depend crucially on the assumption that parents do not care about the numbers or the welfare of the children they have. When parents do care, the conclusion no longer unambiguously follows because the new means for providing for parents' old age leads to a positive income effect.
UR - http://www.scopus.com/inward/record.url?scp=0022264158&partnerID=8YFLogxK
U2 - 10.1016/0304-3878(85)90056-2
DO - 10.1016/0304-3878(85)90056-2
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AN - SCOPUS:0022264158
SN - 0304-3878
VL - 18
SP - 243
EP - 252
JO - Journal of Development Economics
JF - Journal of Development Economics
IS - 2-3
ER -
