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Using a stochastic general equilibrium model with overlapping generations, this paper studies (i) the effects on both extensive and intensive labor supply responses to changes in fertility rates, and (ii) the potential of a retirement reform to mitigate the effects of fertility changes on labor supply. In order to neutralize the effects on effective labor supply of a fertility decline, a retirement reform, designed to increase labor supply at the extensive margin, is found to simultaneously reduce labor supply at the intensive margin. This backlash to retirement reform requires the statutory retirement age to increase more than proportionally to fertility changes in order to compensate for endogenous responses of the intensity of labor supply. The robustness of this result is checked against alternative model specifications and calibrations relevant to an economic region such as Europe.

Economic implications --- Economic Theory & Research --- Fertility decline --- Fertility rates --- General equilibrium --- Health, Nutrition and Population --- Labor Markets --- Labor Policies --- Labour supply --- Macroeconomics and Economic Growth --- Overlapping generations model --- Pensions & Retirement Systems --- Policy Research Working Paper --- Population Policies --- Retirement --- Retirement age --- Retirement Policy --- Social Protections and Labor