Do Household Dynamics Shape Retirement Responses to the Fornero Pension Reform?

This paper examines whether the 2011 Italian Fornero Pension Reform altered retirement behaviour among individuals approaching retirement age and whether household characteristics shaped responses to the reform. Using panel data from Waves 4 and 5 of the Survey of Health, Ageing and Retirement in Europe (SHARE), the analysis exploits variation in reform exposure across age cohorts and over time within a difference-in-differences framework with individual fixed effects. The results provide limited evidence that the reform substantially affected retirement and employment outcomes, although some estimates are consistent with delayed retirement and extended labour market participation. However, important heterogeneity emerges across household contexts. In particular, partnership status provides the strongest, albeit modest, evidence of heterogeneous responses to the reform. By contrast, there is little evidence that gender, number of children, caregiving responsibilities, health status, wealth, social support, or social security wealth systematically alter responses to the reform. These findings suggest that retirement behaviour is shaped not only by individual labour market incentives but also by household decision-making processes. More broadly, the results highlight the importance of considering household dynamics when evaluating the labour supply effects of pension reforms in family-oriented welfare systems such as Italy.