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Total-employed longevity gap, pension fairness and public finance: Evidence from one of the oldest regions in EU

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  • Culotta, Fabrizio
  • Alaimo, Leonardo Salvatore
  • Bravo, Jorge Miguel
  • di Bella, Enrico
  • Gandullia, Luca

Abstract

This work analyses the mortality differential between the total and the employed population for the Italian region of Liguria in 2015–2019. Values for life expectancy at ages [65, 74) are used to quantify the transfer mechanism implicitly triggered when, in the case of persistent longevity heterogeneity, a country-wide longevity factor is adopted in calculating pension annuities. Results confirm that a lower mortality force characterises the employed population of Liguria compared to the total population. In terms of implicit tax/subsidy rates, Liguria total population is almost unaffected, being taxed by an average of 0.05% of the fair value for pension. Instead, Liguria employed population is subsidised by 6.24%. Longevity heterogeneity directly impacts on public finances, if not compensated within the same cohort by socio-economic groups living shorter. Some corrective policies are discussed.

Suggested Citation

  • Culotta, Fabrizio & Alaimo, Leonardo Salvatore & Bravo, Jorge Miguel & di Bella, Enrico & Gandullia, Luca, 2022. "Total-employed longevity gap, pension fairness and public finance: Evidence from one of the oldest regions in EU," Socio-Economic Planning Sciences, Elsevier, vol. 82(PA).
    • Handle: RePEc:eee:soceps:v:82:y:2022:i:pa:s0038012121002135
    DOI: 10.1016/j.seps.2021.101221
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