The Long-run Effects of the Italian Pension Reforms

Author: Sartor N.

Source: International Tax and Public Finance, Volume 8, Number 1, January 2001 , pp. 83-111(29)

Publisher: Springer

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Abstract:

The paper analyses the reforms of the Italian mandatory pension scheme for employees legislated in the 1990s. To assess the effects of the reforms, a microsimulation model calibrated on cross-section data is developed. The model is aimed at estimating the average income of a member of a cohort, as well as the average per capita income of all individuals alive in a given year. The long-run effects of the reform are analysed, comparing the characteristics of alternative financing schemes. A substantial improvement of the equity as well as the long-run sustainability of the Italian public pension schemes emerges. However, the dreary demographic scenario calls for further tightening of eligibility rules sometime in the next decades if long-run sustainability of public debt is to be achieved. On the basis of sensitivity analysis, some changes aimed at hedging the system against unexpected shocks are suggested.

Keywords: public pensions; sustainability of fiscal policy; generational accounting

Language: English

Document Type: Regular paper

Affiliations: 1: Dipartimento di Diritto dell'Economia, Universitàdegli studi di Verona, via dell'Artigliere, 19, I 37129 Verona, Italy

Publication date: 2001-01-01