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Individual heterogeneity and pension choices: Evidence from Italy

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  • Gallo, Giovanni
  • Torricelli, Costanza
  • van Soest, Arthur

Abstract

The 2007 Italian pension reform allowed transferring future severance pay contributions into a pension fund. Although this was accompanied by an information campaign advising employees to make the transfer, only a minority of them did so. We analyze the heterogeneity in employees’ choices using micro panel data from the Bank of Italy household survey. Two are the main findings. First, the decision to transfer and pension fund participation after the reform are more likely for more (financially) educated and older individuals, with high household income and wealth, and less likely for female employees, in the South, and in small firms. Second, framing the analysis within the Elaboration Likelihood Model highlights that the cognitive processes underlying the decision on pension fund participation may be quite different. The decision consciousness is lower for employees working in small firms, where employers have an incentive to stimulate workers to deny the transfer.

Suggested Citation

  • Gallo, Giovanni & Torricelli, Costanza & van Soest, Arthur, 2018. "Individual heterogeneity and pension choices: Evidence from Italy," Journal of Economic Behavior & Organization, Elsevier, vol. 148(C), pages 260-281.
  • Handle: RePEc:eee:jeborg:v:148:y:2018:i:c:p:260-281
    DOI: 10.1016/j.jebo.2018.02.016
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    References listed on IDEAS

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    Keywords

    Pension savings; Severance pay; Financial literacy; Elaboration likelihood model; Cognitive skills;

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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