Social Security and Retirement in Italy
This paper analyzes the incentives provided by the Italian Social Security System (SS) to supply labor. Italy is an interesting example in this context as: (1) fertility rates are very low while life expectancy has improved dramatically over the past decades; (2) the SS Program is extremely generous to retirees by providing very high replacement rates; (3) virtually all retirement income is in the form of SS benefits; (4) the existence of an early retirement provision, which attracts no actuarial penalty, greatly distorts choices in favor of early retirement. This paper addresses the above issue by first documenting the stylized facts of the labor market and the SS provisions. A simulation model is then developed to better understand the incentive effects of SS on current cohorts of retirees. This model proposes two measures for incentives: the accrual rate (i.e. the percentage change in Social Security Wealth) from postponing retirement and the implicit tax/subsidy (via SS entitlements) on potential earnings from working an additional year. The simulation results show that the Italian SS Program provides a strong incentive to retire early and the age-implicit tax profile fits very closely with the estimated hazards out of the labor force. Additional evidence of the existence of behavioral responses to SS policy changes lends further support to the view that old age insurance arrangements have an influence on labor supply decisions.
|Date of creation:||Sep 1997|
|Publication status:||published as Brugiavini, Agar and Franco Peracchi. "Social Security Wealth And Retirement Decisions In Italy," Labour - Review of Labour Economics and Industrial Relations, 2003, v17(Supp), 79-114.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Feldstein, Martin & Liebman, Jeffrey B., 2002.
Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324
- Martin Feldstein & Jeffrey B. Liebman, 2001. "Social Security," NBER Working Papers 8451, National Bureau of Economic Research, Inc.
- Beltrametti, Luca F., 1995. "On pension liabilities in Italy," Ricerche Economiche, Elsevier, vol. 49(4), pages 405-428, December.
- Rossi, Nicola & Visco, Ignazio, 1995. "National saving and social security in Italy," Ricerche Economiche, Elsevier, vol. 49(4), pages 329-356, December.
- Cozzolino, Maria & Padoa Schioppa Kostoris, Fiorella, 1995. "Contribution-based vs. earnings-related retirement pension systems: some policy proposals for Italy," Ricerche Economiche, Elsevier, vol. 49(4), pages 375-403, December.
- Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
- Castellino, Onorato, 1995. "Redistribution between and within generations in the Italian social security system," Ricerche Economiche, Elsevier, vol. 49(4), pages 317-327, December.
- Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-926, Sept./Oct. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:6155. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.