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Reforming The Italian Pension System In The Xxi Century: The Issue Of Seniority Pensions Once Again

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  • PIETRO A. VAGLIASINDI

    (Department of International Economics, Finance and Law, University of Parma, Parma, Italy)

  • MARZIA ROMANELLI

    (LEM, Sant'Anna School of Advanced Studies, Pisa, Italy)

  • CARLO BIANCHI

    (Department of Economics, University of Pisa, Pisa, Italy)

Abstract

Alternative pension schemes, and early retirement provisions in particular, can produce different effects on retirement behavior, with significant economic consequences. This paper presents new evidence on the effect of different seniority pension reforms, considering the evolution of an agent-based economy in Italy, with heterogeneous workers whose retirement age depends on expected lifetime incomes. Using dynamic aging methods, we examine behavioral changes along proposed pension reform paths. Our model — calibrated to replicate the main demographic and economic features and retirement dynamics of the Italian economy — is used to estimate the age of retirement, total pension expenditures, pension benefits and the trend of inequality and poverty among pensioners under different policy scenarios. More precisely, we compare the current state of affairs(B)with a reform proposed by the Italian Welfare Minister(M)and with an early introduction of a mixed regime for seniority pensions(A)according to two limiting "retirement behavioral rules." Under theindividual rationalityhypothesis,Mproduces slightly higher savings with minor redistributive effects; although it leads to an increase in income concentration,Mmitigates poverty problems after 2008. The reform is more effective underfamily-bounded rationality, but it leads to permanent and more significant increases in income concentration and aggravates the diffusion and intensity of poverty.

Suggested Citation

  • Pietro A. Vagliasindi & Marzia Romanelli & Carlo Bianchi, 2004. "Reforming The Italian Pension System In The Xxi Century: The Issue Of Seniority Pensions Once Again," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 241-264.
    • Handle: RePEc:wsi:acsxxx:v:07:y:2004:i:02:n:s0219525904000111
    DOI: 10.1142/S0219525904000111
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    Cited by:

    1. Paolo Pertile & Veronica Polin & Pietro Rizza & Marzia Romanelli, 2012. "Public finance consolidation and fairness across living generations: the case of Italy," Working Papers 04/2012, University of Verona, Department of Economics.
    2. Paolo Pertile & Veronica Polin & Pietro Rizza & Marzia Romanelli, 2015. "The fiscal disadvantage of young Italians: a new view on consolidation and fairness," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(1), pages 27-51, March.

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