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Microsimulation of pension reforms: behavioural versus nonbehavioural approach

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  • BORELLA, MARGHERITA
  • MOSCAROLA, FLAVIA CODA

Abstract

We analyse the impact of various pension regimes, as shaped by recent Italian reforms, on retirement age, adequacy issues, and redistribution. We add to the literature on microsimulation by accounting for individuals' reactions to financial incentives when deciding to retire. We find that shifting from a generous defined benefit (DB) system to an actuarially fair notional defined contribution (NDC) system induces individuals, particularly men, to postpone retirement. Voluntary postponement of retirement would grant employees a replacement rate comparable to that obtained in the pre-reform DB regime, while the self-employed experience a substantial reduction in their replacement rate.

Suggested Citation

  • Borella, Margherita & Moscarola, Flavia Coda, 2010. "Microsimulation of pension reforms: behavioural versus nonbehavioural approach," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(4), pages 583-607, October.
    • Handle: RePEc:cup:jpenef:v:9:y:2010:i:04:p:583-607_99
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    Cited by:

    1. Alessandro Milazzo & Elena Vigna, 2018. "The Italian Pension Gap: a Stochastic Optimal Control Approach," Papers 1804.05354, arXiv.org.
    2. Emanuele Ciani & Marcello Morciano, 2011. "Estimation and Simulation of Earnings in IT-SILC," Center for the Analysis of Public Policies (CAPP) 0090, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    3. Salvador Barrios & Flavia Coda Moscarola & Francesco Figari & Luca Gandullia, 2020. "Size and distributional pattern of pension-related tax expenditures in European countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(5), pages 1287-1320, October.
    4. Alessandro Milazzo & Elena Vigna, 2018. "The Italian Pension Gap: A Stochastic Optimal Control Approach," Risks, MDPI, vol. 6(2), pages 1-20, April.
    5. Jan Hagemejer & Krzysztof Makarski & Joanna Tyrowicz, 2015. "Unprivatizing the pension system: the case of Poland," Applied Economics, Taylor & Francis Journals, vol. 47(8), pages 833-852, February.
    6. Figari, Francesco & Paulus, Alari & Sutherland, Holly, 2014. "Microsimulation and policy analysis," ISER Working Paper Series 2014-23, Institute for Social and Economic Research.
    7. Flavia Coda Moscarola & Elsa Fornero & Steinar Strøm, 2016. "Absenteeism, childcare and the effectiveness of pension reforms," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-18, December.
    8. Alessandra Milazzo & Elena Vigna, 2018. "The Italian Pension Gap: a Stochastic Optimal Control Approach," Carlo Alberto Notebooks 553, Collegio Carlo Alberto.
    9. Concepció Patxot & Meritxell Solé & Guadalupe Souto & Martin Spielauer, 2018. "The Impact of the Retirement Decision and Demographics on Pension Sustainability: A Dynamic Microsimulation Analysis," International Journal of Microsimulation, International Microsimulation Association, vol. 11(2), pages 84-108.
    10. Peri, Giovanni & Romiti, Agnese & Rossi, Mariacristina, 2015. "Immigrants, domestic labor and women's retirement decisions," Labour Economics, Elsevier, vol. 36(C), pages 18-34.
    11. 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).
    12. Alessandro Milazzo & Elena Vigna, 2018. "“The Italian Pension Gap: a Stochastic Optimal Control Approach"," CeRP Working Papers 179, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    13. Flavia Coda Moscarola & Margherita Borella, 2015. "The 2011 Pension Reform in Italy and its Effects on Current and Future Retirees," CeRP Working Papers 151, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    14. Peri, Giovanni & Romiti, Agnese & Rossi, Mariacristina, 2013. "Immigrants, Household Production and Women's Retirement," IZA Discussion Papers 7549, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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