Working Paper: NBER ID: w20491
Authors: Alberto Basso; Howard Bodenhorn; David Cuberes
Abstract: The old-age security hypothesis establishes that one important reason why parents have a large offspring is to ensure that they will receive financial support from them in old age. In this paper we use data on fertility and financial development in 19th century U.S. to indirectly test this theory. In particular, we explore whether more developed local financial markets reduce the incentives for families to have a large offspring. After controlling for several factors likely to create cross-county variation in fertility levels and for potential spatial correlation, we find that the presence of a bank and the degree of financial development in a given county are strongly associated with lower children-to-women ratios. We find compelling evidence for the old-age security hypothesis.
Keywords: fertility; financial development; old-age security hypothesis; 19th century; US counties
JEL Codes: N21; N31; N91; R2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial development (O16) | Fertility (J13) |
| Bank presence (G21) | Child-to-women ratio (J13) |
| Banking activity (G21) | Fertility (J13) |
| Financial development (O16) | Incentives for larger offspring (D15) |