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Children and savings in less developed countries
Journal of Development Economics
|September 1, 1986
Summary
In less developed countries (LDCs), children often provide old-age support. As countries develop, financial institutions can substitute for this role, impacting childbearing motives.
Area of Science:
- Economics
- Demography
- Sociology
Background:
- Childbearing is often motivated by the need for old-age support in less developed countries (LDCs).
- Economic development introduces alternative retirement support mechanisms, potentially altering fertility decisions.
Purpose of the Study:
- To investigate the role of financial institutions as substitutes for children in providing old-age support.
- To develop and test a model examining the relationship between financial development and fertility motives.
Main Methods:
- A two-period economic model was developed to represent retirement support substitution.
- The model's hypotheses were empirically tested using a cross-section sample of countries.
Main Results:
- The availability and quality of financial institutions influence the perceived need for children for old-age security.
- Evidence suggests financial development can reduce reliance on children for retirement support.
Conclusions:
- Financial institutions offer a viable alternative to childbearing for old-age support.
- Development of robust financial systems may contribute to declining fertility rates in developing economies.