Social Security And Retirement Decisions In Italy
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 Householdsâ€™ 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 â€œone-yearâ€ and â€œlifetimeâ€ 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 â€œsocial rules or â€œrules of thumbâ€) 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.
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