Impact of intergenerational transfers on fertility

Abstract

On the theoretical basis of the "generational economy" the article describes the "model of overlapping generations" and "life cycle model" as the cause of the existence of intergenerational transfers. The classification of approaches to their study is carried out. Based on the exchange model (the concept of childbearing as a long-term investment in future transfers from adult children to elderly parents) and the theory of substitutions (crowding out private transfers by public social systems), the "elderly security hypothesis" is highlighted as a possible socio-economic reason for the demographic transition. Based on the works of A. Cigno, a theoretical review of this theory is made using the concepts of ^substitution effect» and «free rider effect». According to the works of R. Fenge and B. Scheubel, the "income effect" and "price effect" are defined as the key parameters for testing this hypothesis. An overview of the existing scientific and practical works on the topic of research is made, highlighting methods and results on the following examples: Italy after World War II, Germany at the turn of the 19th and 20th centuries, Brazil in 1991-2000, Hungary in 19502006, 34 OECD countries in the 1990s and the consolidated data for 121 countries at present. The author has carried out his own empirical test of the «hypothesis of elderly security» in the countries of the world on the basis of UN and OECD statistics. Coverage, social security spending, replacement rate, mandatory premium rate, and an increased risk of poverty among older people support the safe aging theory of upward intergenerational transfers from children to parents. But the internal rate of return of pension systems and the average income of older people support the competing hypothesis of top-down intergenerational transfers from parent to child. It is concluded that, with a relatively low standard of living of population, intergenerational transfers go from children to parents, but when a certain level of national welfare is reached, the movement of transfers changes to the opposite direction.