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Retirement Expectations and Pension Reforms

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Abstract

We estimate the effect of pension reforms on households' expectations and wealth accumulation decisions. We rely on self-reported expectations to measure perceived social security benefits and to a series of pension reforms as a source of exogenous variations in pension wealth. Two parameters are crucial to estimate pension wealth: the age at which workers expect to retire and the ratio of pension benefits to pre-retirement income (the replacement rate). The Survey of Household Income and Wealth, a large representative sample of the Italian population, elicits these expectations from 1989 to 2000, a period spanning intense pension reforms. These reforms had different impact on different cohorts and employment groups, providing a quasi-experimental framework to study the effect of pension reforms on expectations and household saving. We find substantial offset between private wealth and perceived pension wealth. However, the Italian pension reforms of the 1990s had only limited impact on household saving rates, because people have not yet fully adjusted their expectations of future benefits

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  • Tullio Jappelli & Mario Padula & Renata Bottazzi, 2003. "Retirement Expectations and Pension Reforms," CSEF Working Papers 92, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    • Handle: RePEc:sef:csefwp:92
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    Cited by:

    1. Tito Boeri & Guido Tabellini, 2012. "Does information increase political support for pension reform?," Public Choice, Springer, vol. 150(1), pages 327-362, January.

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    Keywords

    business groups; financially constrained entry; internal capital markets; multimarket competition;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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