Pietro A. Vagliasindi

Validating a Dynamic Microsimulation Model of the Italian Households

The recent literature — including among others Redmond et al. [22], Gupta and Kapur [13], Mitton et al. [19] — has highlighted model alignment and validation as crucial issues to be tackled when microsimulating the consequences of public policies. This paper discusses some preliminary validation experiments performed on the model inputs, procedures and simulation results. The validation process that we use involves external checks, such as the ex-post comparison (from 1996 since 1999) of aggregated key macro variables (e.g. dependent workers’ incomes, and demographic variables) with official data (e.g. supplied by the Italian National Institute for Statistics ISTAT) at national and at regional level (North, Centre and South). We test the appropriateness of the main assumptions and specification of the model and policies’ effectiveness also using Monte Carlo simulations. Specifically, our analysis allows us to test MIND’s ability in forecasting demographic and economic trends and in capturing socio-economic dynamics for regional areas.

Early Retirement From The Labour Market: Policy Experiments In The Italian Case

AbstractThe substantial changes in the Italian pension system over the last decade subsequent to the Amato, Dini, Prodi and Berlusconi reforms have given raise to a renewed debate on re-designing pension system and in particular seniority pensions. Workers respond quickly to different incentives present in the pension systems and to expected government policies, especially through their retirement choices. These reactions, in turn, can or should inform government policy design to contrast the consequences of the ageing process. Based on the not fully satisfactory way of addressing such issues, this paper aims to shed some new light on the transition from one pension regime to another. After a brief review of the economic literature, this paper presents a bit more evidence on early retirement and its future evolution using dynamic ageing methodology, considering an economy, with heterogeneous workers, whose retirement age depends on expected utility. We examine behavioural changes estimating the age of retirement along the current pension reform path, assuming different behavioural regimes and policies, using a model calibrated to reproduce the main Italian demographic and economic features and retirement dynamics. We find a tendency to postpone the exit from labour market, especially when workers maximise their benefits flow coming from all incomes, instead of sole pension benefits. In this case, pension expenditures grow faster, because savings, due to retirement postponement, are compensated by higher benefits. Finally, we consider how future trends of inequality and poverty among pensioners can be negatively affected by the government seniority pension reform and propose possible remedies.

Privatisation Methods and Enterprise Governance in Transition Economies

Over the past two decades the sale of formerly state-owned enterprises (SOEs) to private investors on a worldwide scale and recently in transition economies (TE) represented an economic phenomenon of remarkable magnitude. Notably, not only has privatisation significantly affected market capitalisation, trading volumes, and investor participation, but also it marked a permanent reversal of public policy in relation to government direct participation in business. However, notwithstanding the influential Coasian view, according to which ownership transfer should be enough to achieve efficiency and to boost economic growth, the initial enthusiasm in prescribing a speed privatisation as a recipe for all countries has given rise to more cautious attitudes. TE experience demonstrated that, in order to be effective, privatisation should be complemented by reforms stimulating corporate governance and developing prudent rules and regulations, such as disclosure, and legal and accounting practices necessary for well functioning capital markets.

Policy Analysis Using a Microsimulation Model of the Italian Households

In this paper, we apply a dynamic microsimulation approach, which allows us to examine the evolution of the system as a whole and at the same time to focus our attention on the different typologies of workers and pensioners. The latter objective is achieved by simulating individual reactions to systemic changes, while taking into account the regional dimensions. This technique also enables us to perform a general micro-analysis of the effects of past reforms on family pension-income distribution and average individual pension-benefits. The analytical framework used is the dynamic microsimulation model MIND, jointly developed by the University of Parma and Pisa, that incorporates behavioural analysis of individual choices of retirement age, derived from the Stock-Wise [24] option value model. We also perform sensitivity analysis on the model. This represents a valuable technique for treating uncertainty in input variables and for testing the robustness of the simulation results to possible changes in the macroeconomic scenario. In particular, we measure the economic impact resulting from alternative values of the income growth rate and the real interest rate as well as the effect of different distributions of the education degree reached by the individuals.