Households' Saving and Debt in Italy

In this paper we review household saving and debt trends in Italy. We summarize the available empirical evidence on Italians' motives to save, relying on macroeconomic indicators and data drawn from the Bank of Italy's Surveys of Household Income and Wealth from 1984 to 2012. The macroeconomic data indicate that households' saving has dropped significantly, although Italy continues to rank above most other countries for saving. Using microeconomic data we examine four indicators of household financial conditions: propensity to save, proportion of households with negative saving, proportion of households with debt, and proportion of households that lack access to formal credit markets. An international comparison shows that the level of debt and default risk among Italian households are relatively low. However, in light of the deep changes made to the Italian pension system, the fall in saving is a concern, particularly in the case of individuals who entered the labor market after the 1995 reform and have experienced the largest decline in pension wealth.