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Microsimulation applied to Pension System: Redistribution effect od Reforms in Italy

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  • Francesco MARCHIONNE

    () (Universita' Politecnica delle Marche, Dipartimento di Economia)

Abstract

Amato reform ('92), Dini reform ('95), Prodi reform ('98), Maroni-Berlusconi reform ('04): in the last 15 years all governments have modified the Italian pension system. What has changed? What will change? Why? What are the goals? In the chaos of reforms the only certainty for the citizens seems that future pensions will be lower than present ones. But ... how lower will they be? Who has really "won" the reform match? In the general reduction in performance, who has "lost less"? And above all, is the era of reforms in Italy over or is it just the first half of a "film"? In the following pages, I will try to answer to all these questions. In the first part, I will analyze the characteristics of the Italian pension system before the 90's reforms to understand how they have affected the pension system system. In the second part, I will try to foresee the effects these reforms will have in the next decade through a microsimulation model. This model has been created with an innovative procedure based on an integrated (and non sequential) simulation of events. This new approach should guarantee more efficiency with respect to the traditional one even though there are some technical complications in its implementation. Two main results have been obtained. The first one is that actuarial equity is mainly achieved by homogenising regimes and by raising the minimum requisites for being eligible for pension ('92 reform) more than through the introduction of defined contributions ('95 reform). The second result is that excessive lowering of benefits affects negatively on actuarial equity weakening a basic principle established by the reforms themselves. Practically, the non-division of assistance from pension system and the low level of performance determine unhomogeneous benefits. From a pure actuarial defined contribution system point of view, it is unjustified. Without praising how much good has been achieved till date, the new reforms should be aimed at overcoming these precise obstacles.

Suggested Citation

  • Francesco MARCHIONNE, 2007. "Microsimulation applied to Pension System: Redistribution effect od Reforms in Italy," Working Papers 291, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  • Handle: RePEc:anc:wpaper:291
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    Cited by:

    1. Ugo FRATESI, 2010. "The National and International Effects;of Regional Policy Choices: Agglomeration Economies, Peripherality and Territorial Characteristics," Working Papers 344, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    2. Luca RICCETTI, 2010. "Minimum Tracking Error Volatility," Working Papers 340, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    3. Luca RICCETTI, 2011. "A Copula-GARCH Model for Macro Asset Allocation of a Portfolio with Commodities: an Out-of-Sample Analysis," Working Papers 355, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    4. Fabio FIORILLO & Agnese SACCHI, 2010. "I Want to Free-ride. An Opportunistic View on Decentralization Versus Centralization Problem," Working Papers 346, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    5. Elena AMBROSETTI & Eralba CELA & Tineke FOKKEMA, 2011. "The Remittances Behaviour of the Second Generation in Europe: Altruism or Self-Interest?," Working Papers 368, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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