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Welfare Effects of Social Security Reforms Across Europe: The Case of France and Italy

  • Raquel Fonseca
  • Thepthida Sopraseuth

This paper uses a calibrated life cycle model to quantify the distributional effects of Social Security reforms. The authors focus on two countries, Italy and France, because they adopted two different strategies to cope with aging. While France marginally modified its defined benefit pension plan, Italy switched from a defined benefit pension plan to a contributive system. They find both reforms redistribute welfare unevenly: high skilled workers are the primary winners of the French reform and self employed individuals, especially unskilled workers, are the losers under the new Italian Social Security arrangement. Finally, they estimate that the French reform only finances 20% of the expected deficit. This is in sharp contrast with the Italian reform which finances the expected deficit by cutting drastically the generosity of Social Security benefits.

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Paper provided by RAND Corporation Publications Department in its series Working Papers with number 437.

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Length: 44 pages
Date of creation: Oct 2006
Date of revision:
Handle: RePEc:ran:wpaper:437
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  8. Agar Brugiavini & Vincenzo Galasso, 2003. "The Social Security Reform Process in Italy: Where do We Stand?," Working Papers wp052, University of Michigan, Michigan Retirement Research Center.
  9. Hansen, G.D. & Imrohoroglu, A., 1990. "The Role Of Unemployment Insurance In An Economy With Liquidity Constraints And Moral Hazard," Papers 21, California Los Angeles - Applied Econometrics.
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  11. Didier Blanchet & Louis-Paul Pele, 1997. "Social Security and Retirement in France," NBER Working Papers 6214, National Bureau of Economic Research, Inc.
  12. Agar Brugiavini & Franco Peracchi, 2003. "Social Security Wealth and Retirement Decisions in Italy," LABOUR, CEIS, vol. 17(SpecialIs), pages 79-114, 08.
  13. Michael D. Hurd, 1993. "The Effect of Labor Market Rigidities on the Labor Force Behavior of Older Workers," NBER Working Papers 4462, National Bureau of Economic Research, Inc.
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  15. Edward C. Prescott, 1986. "Theory ahead of business cycle measurement," Staff Report 102, Federal Reserve Bank of Minneapolis.
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  17. David M. Blau, 2008. "Retirement and Consumption in a Life Cycle Model," Journal of Labor Economics, University of Chicago Press, vol. 26, pages 35-71.
  18. Ana Castaneda & Javier Diaz-Gimenez & Jose-Victor Rios-Rull, 2003. "Accounting for the U.S. Earnings and Wealth Inequality," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 818-857, August.
  19. Luisa Fuster & Ayse Imrohoroglu & Selahattin Imrohoroglu, 2003. "A welfare analysis of social security in a dynastic framework," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1247-1274, November.
  20. Anne Laferrère & Luc Arrondel, 1991. "Successions et héritiers à travers les données fiscales," Économie et Prévision, Programme National Persée, vol. 100(4), pages 137-159.
  21. François Langot & Jean-Olivier Hairault, 2002. "Inégalités et réformes des retraites," Revue Française d'Économie, Programme National Persée, vol. 17(1), pages 97-159.
  22. Queisser, Monika & Whitehouse, Edward, 2005. "Pensions at a glance: public policies across OECD countries," MPRA Paper 10907, University Library of Munich, Germany.
  23. David A. Wise, 1996. "Advances in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise96-1, July.
  24. Jean-Olivier Hairault & François Langot & Thepthida Sopraseuth, 2004. "A Quantitative Investigation of the Laffer Curve on the Continued Work Tax: The French Case," Documents de recherche 04-15, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
  25. Rios-Rull, Jose-Victor, 1996. "Life-Cycle Economies and Aggregate Fluctuations," Review of Economic Studies, Wiley Blackwell, vol. 63(3), pages 465-89, July.
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