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Social Security And Retirement Decisions In Italy

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  • Luca Spataro

Abstract

In this work I investigate the responsiveness of Italian workers to the early retirement incentives provided by the Social Security (SS) and try to shed light on the nature of the puzzling age-60-spike in the retirement hazards. The empirical analysis carried out on a sample drawn from the panel of the Bank of Italy Survey on Households’ Income and Wealth (SHIW) shows that SS has very much to do with the high early exits rates from labor-force experienced by Italy during the last decade; yet, not all the SS incentive measures analyzed turn out to really matter to individuals: for example, the Replacement Ratio appears to fit the data fairly better than the Social Security Wealth, while both “one-year†and “lifetime†dynamic incentive measures fall short in explaining retirement behavior; in fact only two of the latter forward-looking parameters come out to significantly affect the probability of retiring. According to the estimations binding eligibility constraints are only partly responsible for the empirical age-60-spike of retirement hazards: in fact evidence of significant unexplained factors (possibly “social rules or “rules of thumb†) is provided. Finally, I find evidence of spouses coordination and relevant family composition effects among Public Sector employees, while the achievement of adequate income and wealth levels appear to significantly delay the age of retirement of Private Sector workers.

Suggested Citation

  • Luca Spataro, "undated". "Social Security And Retirement Decisions In Italy," Discussion Papers 2003/1, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
  • Handle: RePEc:pie:dsedps:2003/1
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    File URL: http://www.ec.unipi.it/documents/Ricerca/papers/2003-1.pdf
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    References listed on IDEAS

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    1. Samwick, Andrew A., 1998. "New evidence on pensions, social security, and the timing of retirement," Journal of Public Economics, Elsevier, vol. 70(2), pages 207-236, November.
    2. Luca Spataro, 2002. "New Tools in Micromodeling Retirement Decisions: Overview and Applications to the Italian Case," Computing in Economics and Finance 2002 109, Society for Computational Economics.
    3. Luca Spataro, 2000. "Le scelte di pensionamento in Italia: un'applicazione (ed estensione) del modello Option Value," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2000(72).
    4. Jenkins, Stephen P, 1995. "Easy Estimation Methods for Discrete-Time Duration Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 129-138, February.
    5. Sewin Chan & Ann Huff Stevens, 2001. "Retirement Incentives and Expectations," NBER Working Papers 8082, National Bureau of Economic Research, Inc.
    6. Agar Brugiavini & Franco Peracchi, 2004. "Micro-Modeling of Retirement Behavior in Italy," NBER Chapters,in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 345-398 National Bureau of Economic Research, Inc.
    7. Raffaele Miniaci, 1998. "Microeconometric Analysis of the Retirement Decision: Italy," OECD Economics Department Working Papers 205, OECD Publishing.
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    Citations

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    Cited by:

    1. Luciano Fanti & Luca Gori, 2012. "Endogenous Lifetime in an Overlapping-Generations Small Open Economy," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(2), pages 121-152, June.
    2. Marco Guerrazzi, 2005. "Notes on Continuous Dynamic Models: the Benhabib-Farmer Condition for Indeterminacy," Discussion Papers 2005/54, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Luca Spataro, 2002. "New Tools in Micromodeling Retirement Decisions: Overview and Applications to the Italian Case," Computing in Economics and Finance 2002 109, Society for Computational Economics.
    4. Pompeo Della Posta, 2003. "Optimal Monetary Instruments and Policy Games Reconsidered," Discussion Papers 2003/12, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    5. Fabio Pammolli & Nicola Carmine Salerno, 2004. "Regole pensionistiche e prolungamento dell'attività: analisi del TIR e effetti del cumulo lavoro-pensione," Working Papers CERM 07-2004, Competitività, Regole, Mercati (CERM).
    6. Luciano Fanti & Luca Gori, 2009. "Endogenous fertility, endogenous lifetime and economic growth: the role of health and child policies," Discussion Papers 2009/91, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    7. Maurizio Lisciandra, 2007. "The Role of Reciprocating Behaviour in Contract Choice," Discussion Papers 2007/65, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    8. Luciano Fanti & Luca Gori, 2008. "PAYG pensions and economic cycles: exogenous versus endogenous fertility," Discussion Papers 2008/75, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

    More about this item

    Keywords

    Social Security; Retirement Decisions; Panel Data; Survival Analysis;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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