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Early Announcement of a Public Pension Reform in Italy

Author

Listed:
  • Maria I. Marika Santoro

    (Congressional Budget Office, Washington)

Abstract

What is the macroeconomic impact of announcing a pension system reform in advance? The Italian reform in 1992 represents an illustrative case to address this question. Using an overlapping-generations model, we simulate the pre-announcement of five-year increase in the retirement eligibility age within 1992 Italian pension system. The simulation results show that the transition would be characterized by a drop in the employment rate of workers ages 55 and older explaining 77 percent of the actual drop. They also predict an 8 percent increase in pensions' expenditure and explain 83 percent of the actual increase. Finally, the welfare analysis highlights a loss for almost all the transitional generations.

Suggested Citation

  • Maria I. Marika Santoro, 2006. "Early Announcement of a Public Pension Reform in Italy," Rivista di Politica Economica, SIPI Spa, vol. 96(5), pages 179-216, September.
    • Handle: RePEc:rpo:ripoec:v:96:y:2006:i:5:p:179-216
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    Citations

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    Cited by:

    1. Fedotenkov, Igor, 2016. "Ignorance is bliss: Should a pension reform be announced?," Economics Letters, Elsevier, vol. 147(C), pages 135-137.
    2. Huixin Bi & Sarah Zubairy, 2020. "Public Pension Reforms and Fiscal Foresight: Narrative Evidence and Aggregate Implications," Research Working Paper RWP 20-06, Federal Reserve Bank of Kansas City.

    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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