JOINTLY DETERMINED SAVING AND FERTILITY BEHAVIOR - THEORY, AND ESTIMATES FOR GERMANY, ITALY, UK AND USA

The comparative-statics predictions of models of the joint determinati on of household saving and fertility are derived under various hypothe ses (self-interest, altruism of parents towards children, altruism of children towards parents, etc.) and compared with those of models whic h determine saving under the assumption of exogenous fertility. Countr y-specific saving and fertility equations are then estimated, using ti me series data for Germany, Italy, UK and USA. For each of the countri es considered, the estimates are consistent with the hypothesis that s aving and fertility are jointly determined by self-interested parents, and reject the alternative hypotheses. The data also show that a self -financing expansion of social security discourages fertility, and gen erally raises household saving.