This paper uses administrative data to study the retirement decisions of Italian privatesector non-agricultural employees during the period 1977—1997. 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 di?er 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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Martin Feldstein & Jeffrey B. Liebman, 2001.
"Social Security,"
NBER Working Papers
8451, National Bureau of Economic Research, Inc.
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Other versions:
Feldstein, Martin & Liebman, Jeffrey B., 2002.
"Social security,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324
Elsevier.
[Downloadable!] (restricted)
Agar Brugiavini & Franco Peracchi, 2004.
"Micro-Modeling of Retirement Behavior in Italy,"
NBER Chapters,
in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 345-398
National Bureau of Economic Research, Inc.
[Downloadable!]
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