Private and public costs and benefits: at the economic roots of Italian low fertility

The paper analyses public subsidies received by Italian families with dependant and benefits enjoyed by society when young cohorts replace the old. An extended version of "generational accounting" models is developed to derive empirical estimates. Results show that public support is not negligible, representing on average one third of the total cost of children. However, support is mainly geared to "old" family types - characterised by an absence of major economic problems and by low female labour market participation. The second part of the research explores the hypothesis that the current low demographic scenario can be characterised by "demographic free-riding". Conclusions are such that the free-riding hypothesis is accepted. However, the scenario resembles the "positive externality" case more than that of "pure public good".