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A general equilibrium evaluation of the sustainability of the new pension reforms in Italy

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  • Magnani, Riccardo

Abstract

Most European countries have recently introduced pension system reforms to face the financial problem related to population ageing. Italy is not an exception. The reforms introduced during the Nineties (Amato Reform in 1992 and Dini Reform in 1995), even if they will produce a strong reduction in pension benefits, are generally considered not sufficient to adequately face the population ageing problem. For this reason, in 2004, the Berlusconi government introduced a new reform that increases the retirement age to 60Â years from January 2008 onwards, to 61Â years from 2010 and to 62 from 2014. In 2007, the left-wing government replaced this reform with a softer one that fixes the minimum retirement age at 58 from 2008. Using an applied overlapping-generations general equilibrium model with endogenous growth due to human capital accumulation, we analyse the impact of the new reforms on the macroeconomic system and in particular on the long-run sustainability of the pension system. We show that the increase in the retirement age would permit to reduce pension deficits in the short and medium run, while in the long run these reforms would become completely ineffective.

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  • Magnani, Riccardo, 2011. "A general equilibrium evaluation of the sustainability of the new pension reforms in Italy," Research in Economics, Elsevier, vol. 65(1), pages 5-35, March.
  • Handle: RePEc:eee:reecon:v:65:y:2011:i:1:p:5-35
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    Cited by:

    1. Ekaterina A. Klepikova, 2015. "Estimating the Relationship between Health and Employment of Russian People in Pensionable Age," HSE Working papers WP BRP 100/EC/2015, National Research University Higher School of Economics.
    2. Johannes Berger & Thomas Davoine & Philip Schuster & Ludwig Strohner, 2016. "Cross-country differences in the contribution of future migration to old-age financing," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 1160-1184, December.
    3. Davide Bazzana, 2020. "Ageing population and pension system sustainability: reforms and redistributive implications," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 971-992, October.
    4. Zhen Hu & James Yang, 2021. "Does Delayed Retirement Crowd Out Workforce Welfare? Evidence in China," SAGE Open, , vol. 11(4), pages 21582440211, November.

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    More about this item

    Keywords

    Pension reforms Applied OLG models Immigration Human capital Endogenous growth;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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