Measuring Intra-Generational and Inter-Generational Redistribution in the Reformed Italian Social Security System

Government of the Italian Republic (Italy), Ministry of Economy and Finance, Department of the Treasury Working Paper No. 11

48 Pages Posted: 20 Dec 2011

See all articles by Carlo Mazzaferro

Carlo Mazzaferro

University of Bologna - Department of Economics

Marcello Morciano

University of Essex - Institute for Social and Economic Research (ISER)

Date Written: December 14, 2011

Abstract

Reforms to the Italian social security system, carried out from 1992 onwards, will dramatically change its structure in the long run. So far, empirical research has devoted more attention to their macroeconomic and financial effects while relatively less attention has been paid to analyzing their re-distributional implications.

We present this line of research using CAPP_DYN, a population-based dynamic microsimulation model. The model stochastically simulates the socio-demographic and economic evolution of a representative sample of the Italian population over the period 2010-2050. The initial sample is subjected to a large number of demographic and economic events such as partnership formation/dissolution, birth, education, work, retirement, health and disability and death. While acknowledging the rather complex phasing in of the Notional Defined Contribution system, introduced into the Italian social security system from 1995, a set of indexes (net present value ratio, Gini index, replacement ratios etc.) is used to evaluate the distributional properties of the reformed pension system in each of the simulated years as well as in a life-time/cohort perspective. Two main critical distributional aspects will emerge. Firstly the model predicts an increase in the old-age pensions dispersion in the transitional phase (2015–2030) due to the coexistence of different pension regimes and rules in calculating pensions. Moreover, a problem of adequacy in the public pension system from 2035 emerges as the NDC system will be almost completely phased in.

JEL Classification: H20, H30, H55

Suggested Citation

Mazzaferro, Carlo and Morciano, Marcello, Measuring Intra-Generational and Inter-Generational Redistribution in the Reformed Italian Social Security System (December 14, 2011). Government of the Italian Republic (Italy), Ministry of Economy and Finance, Department of the Treasury Working Paper No. 11. Available at SSRN: https://ssrn.com/abstract=1974415

Carlo Mazzaferro (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Marcello Morciano

University of Essex - Institute for Social and Economic Research (ISER) ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

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