Carlo Mazzaferro

THE DISTRIBUTION OF TOTAL WEALTH IN ITALY: 1991–2002

We estimate an “augmented” measure of wealth incorporating social security wealth for the first time in Italy, and examine the composition and distribution of such augmented wealth among Italian households during the period 1991–2002. The path followed by augmented wealth from 1991 to 2002 is determined by two opposing forces: namely an increase in net worth and a decline in social security wealth, which appears to be much more pronounced in the first part of the period. Wealth inequality, after rising steeply at the beginning of the 1990s, leveled off during the second part of the period in question. The major contribution toward this upwards movement came from social security wealth, the distribution of which, although less unequal than that of real wealth and financial wealth, widened at a much faster pace at the beginning of the decade.

The Strengths and Failures of Incentive Mechanisms in Notional Defined Contribution Pension Systems

Public pension systems based on the Notional Defined Contribution (NDC) principle were introduced during the ‘90s in Italy, Sweden and Poland, among other countries. They mimic private savings, in that individuals get back, as pensioners, what they contributed to social security during working life, plus returns. As such, NDC systems should realize actuarial equity and incentive neutrality. However, when one considers the presence of NDC pensions together with minimum and social assistance pensions, this is no longer true. Indeed, in all the three countries considered, the NDC system shows a regressive feature, which disincentives contributions, particularly from low earners, who would be better off entering, or staying in, the shadow economy. In order to reduce the extent of this phenomenon, we examine the effects of introducing, or increasing, the possibility of accumulation of social assistance and NDC pensions, which would also improve pension adequacy. A complete accumulation of the two would solve the incentive problem, but would be costly and would require a structural reform of the pension system financing mechanism, altering the current balance between social contributions and general fiscal revenues. We show the effects of a change in the accumulation rules for social assistance and NDC pensions in Italy using CAPP DYN, a population-based dynamic micro simulation model, which allows assessment of the evolution of the pension system in the coming decades and the distributional implications of such reform.

Assessing the implications of long-term care policies in Italy: a microsimulation approach

This paper estimates the future characteristics of the long-term disabled in Italy and the evolution of total public expenditure for long-term care. The future dynamics of ltc expenditure in Italy is of particular relevance for two reasons: the limited and insufficient level of public expenditure currently targeted to the disabled, and the perspective in the next few decades of one of the most rapid ageing processes in the world. The analysis is carried out using a dynamic microsimulation model that estimates the evolution for the next five decades of the social and economic structure of the Italian population. After an analysis of the future structure of the pool of the disabled population, we consider two alternative hypotheses for the dynamics of public expenditure in ltc: the simple continuation of the current rules, and a significant increase in the generosity of public schemes, in order to satisfy the mounting pressure coming from households. We also compute the implicit tax rates needed to raise the required resources.

Pension expectations and reality. What do Italian workers know about their future public pension benefits

We use 6 waves of the Bank of Italy’s Survey on household income and wealth (SHIW) to check the evolution of workers’ expectations on future pension benefits and retirement age from 2000 to 2012. Based on these two subjective evaluations, we compute a measure of expected pension benefit and compare it with a “true” measure of the same variable that we estimate on the basis of the pension rules in each year of the considered time lapse. By comparing subjective and “true” measures of the variable, we are able to measure the evolution over time of the “expectation error” and its distribution among different economic and demographic subsets of the population. Finally, we estimate a subjective measure of social security wealth and the degree of substitution between this variable and the private net worth of workers’ households, in order to quantify the effects of pension reforms approved in the period considered on wealth accumulation.

Pension expectations, reforms and macroeconomic downturn in Italy. What can microdata tell us?

ABSTRACT We use different years of the Bank of Italy’s Survey on Household Income and Wealth (SHIW) to explore how Italian workers’ expectations regarding their future level of pension benefits and retirement age changed from 2000 to 2014. Comparing expected and statutory values for future pension benefits and retirement ages, we find that knowledge of the pension system and its rules are not evenly distributed among workers. Some sections of the population, in particular, younger workers, women and the self-employed, are less precise in estimating their future pension benefits. As for retirement age, a large share of the working population still has not completely assimilated the implications of the linkage with the evolution of lifetime expectations at 65. Expectations in the final part of the period observed are dominated by increasing pessimism, which may be related to the macroeconomic crisis of the Italian economy and to the approval of a severe pension reform in 2011. Checking whether a household’s total wealth is consistent with lifetime consumption, we find that households where the head overestimates the future value of the pension benefit accumulate fewer resources than the remaining part of the population.

Le criticità della riforma pensionistica" Monti-Fornero". Una prima valutazione mediante un modello di microsimulazione

This article analyses the impact of the latest pension reform brought in by the Monti government. The text provides estimates of its effects on retirement age and pension levels, as well as the effects in terms of total employment and productivity, taking into account the extension of working life. Also analysed are various incentive mechanisms and distributive aspects. In the text use is made of a dynamic microsimulation model, capp_dyn, described in detail in the Appendix.

Pension reforms, tax incentives and saving in Italy

The Economics of an Ageing Population studies the effects of demographic transition on the economies of industrialised countries. The authors demonstrate that an ageing population does not necessarily lead to a reduction in growth, providing that the working population are more productive and save a greater percentage of their income. They look in detail at the examples of Italy and Japan, two countries which have the fastest ageing populations in Europe and the world respectively.