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Social Security Wealth and Retirement Decisions in Italy

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  • Agar Brugiavini
  • Franco Peracchi

Abstract

. This paper uses administrative data to study the retirement decisions of Italian private‐sector non‐agricultural employees during the period 1977–97. Our analysis tries to assess the importance of the financial incentives built into the social security system. The basic idea is very simple: at any given age, and based on the available information, workers compare the expected present value of two alternatives: retiring today or working one more year, and then choose the best one. A key role in this kind of comparisons is played by social security wealth, whose level and changes reflect the expectations about the profile of future earnings and the institutional features of the social security system. The various incentive measures that we consider differ in the precise weight given to the social security wealth that workers accrue as they continue to work. Our model does not provide a structural representation of the retirement process. A worker's decision is modeled here following a ‘quasi reduced‐form’ approach, with the incentive measures entering as predictors of the worker's choice in addition to standard variables. The estimated models are then used to predict retirement probabilities under alternative policies that change social security wealth and derived incentive measures.

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  • Agar Brugiavini & Franco Peracchi, 2003. "Social Security Wealth and Retirement Decisions in Italy," LABOUR, CEIS, vol. 17(s1), pages 79-114, August.
    • Handle: RePEc:bla:labour:v:17:y:2003:i:s1:p:79-114
    DOI: 10.1111/1467-9914.17.specialissue.4
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    References listed on IDEAS

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    Cited by:

    1. Emanuele Ciani & Marcello Morciano, 2011. "Estimation and Simulation of Earnings in IT-SILC," Department of Economics 0660, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    2. Raquel Fonseca & Thepthida Sopraseuth, 2005. "Welfare Effects of Social Security Reforms Across Europe : the Case of France and Italy," CSEF Working Papers 138, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    3. Elena Giarda, 2008. "The worsening of wage expectations in Italy: a study based on administrative data," International Journal of Manpower, Emerald Group Publishing Limited, vol. 29(1), pages 64-87, March.
    4. Michele Belloni & Rob Alessie, 2013. "Retirement Choices in Italy: What an Option Value Model Tells Us," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(4), pages 499-527, August.
    5. Belloni, Michele & Alessie, Rob, 2009. "The importance of financial incentives on retirement choices: New evidence for Italy," Labour Economics, Elsevier, vol. 16(5), pages 578-588, October.
    6. Agar Brugiavini & Franco Peracchi, 2010. "Youth Unemployment and Retirement of the Elderly: The Case of Italy," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 167-215, National Bureau of Economic Research, Inc.
    7. Agar Brugiavini & Raluca Elena Buia & Giacomo Pasini & Guglielmo Weber, 2019. "The Evolution of Incentives for Retirement in Italy, 1980–2015," NBER Chapters, in: Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, pages 227-269, National Bureau of Economic Research, Inc.
    8. Giuseppe Carone, 2005. "Long-Term Labour Force Projections for the 25 EU Member States:A set of data for assessing the economic impact of ageing," Labor and Demography 0512006, University Library of Munich, Germany.
    9. Agnese Romiti & Maria Cristina Rossi, 2011. "Should we Retire Earlier in order to Look After our Parents? The Role of immigrants," CeRP Working Papers 124, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    10. Carlo Mazzaferro & Stefano Toso, 2009. "The Distribution Of Total Wealth In Italy: 1991–2002," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(3), pages 779-802, September.
    11. Michele Belloni & Rob Alessie, 2008. "The Importance of Financial Incentives on Retirement Choices," Tinbergen Institute Discussion Papers 08-052/3, Tinbergen Institute.
    12. Isabel Cairó-Blanco, 2010. "An empirical analysis of retirement behaviour in Spain: partial versus full retirement," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(3), pages 325-356, July.
    13. Antonio Abatemarco & Maria Russolillo, 2023. "The Dynamics of the Gender Gap at Retirement in Italy: Evidence from SHARE," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(2), pages 445-473, July.
    14. Raquel Fonseca & Thepthida Sopraseuth, 2005. "Welfare Effects of Social Security Reforms Across Europe : the Case of France and Italy," CSEF Working Papers 138, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    15. Ranzani, Marco, 2006. "Social Security and Labour Supply: the Italian 1992 Reform as a Natural Experiment," MPRA Paper 16569, University Library of Munich, Germany, revised Dec 2008.
    16. Roberto Leombruni & Matteo Richiardi, 2006. "LABORsim: An Agent-Based Microsimulation of Labour Supply – An Application to Italy," Computational Economics, Springer;Society for Computational Economics, vol. 27(1), pages 63-88, February.

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