Fertility and Parental Retirement

Using administrative data we show that a pension reform implemented in 2006 in the Netherlands reduced the fertility of women with affected mothers. The reform eliminated the tax deductibility of sectoral pension contributions for individuals born after 1949 while preserving it for those born before 1950. As a result those born after 1949 had to work longer to achieve a benefit level they would have achieved in the absence of the reform. The resulting fertility reduction for women with affected mothers is likely permanent and large relative to the increase in retirement age achieved by the reform. It is concentrated amongst lower income women. We supplement our results with the findings from the Generations and Gender Survey and argue that the effect can be explained by a decrease in potential grandparental childcare provision. Our results suggest that changes to pension systems can have unintended consequences for the subsequent generation's fertility