Self-Employment in Italy: The Role of Social Security Wealth

37 Pages Posted: 10 Mar 2016

See all articles by Margherita Borella

Margherita Borella

University of Torino - Dipartimento di scienze economico-sociali e matematico-statistiche; CeRP - Collegio Carlo Alberto

Michele Belloni

Ca Foscari University of Venice - Dipartimento di Economia; Center for Research on Pensions and Welfare Policies (CeRP); Netspar

Date Written: February 11, 2016

Abstract

Using a rich micro dataset drawn from administrative archives, we explore whether Social Security Wealth (SSW) is an important factor affecting the decision to become self-employed in Italy. We focus on the two main categories of self-employed professions covered by the Italian public pension system: craftsmen and shopkeepers. We use the large exogenous variation in individual expected SSW that occurred as a result of the policy reform process undertaken in Italy during the 1990s to identify the effect of this variable and we study how the probability of being self-employed or employed depends, amongst other things, on the difference in the expected SSW that accrues under the two alternative employment scenarios. Our key finding is that a higher difference in expected SSW from self-employment compared to employment has a positive effect on the probability of being self-employed and on the probability of switching to self-employment, while it has a negative effect on the probability of switching from self-employment to employment. We also study how these effects vary with age and, in general, we find that the effect is, in absolute terms, stronger at younger and older ages.

Keywords: Self-employment, Social Security Wealth, Social Security reforms

JEL Classification: J26, J62, L26, H55

Suggested Citation

Borella, Margherita and Belloni, Michele, Self-Employment in Italy: The Role of Social Security Wealth (February 11, 2016). Netspar Discussion Paper No. 02/2016-008. Available at SSRN: https://ssrn.com/abstract=2743103 or http://dx.doi.org/10.2139/ssrn.2743103

Margherita Borella (Contact Author)

University of Torino - Dipartimento di scienze economico-sociali e matematico-statistiche ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy

HOME PAGE: http://https://sites.google.com/site/margheritaborella/

CeRP - Collegio Carlo Alberto

Via Real Collegio, 30
Moncalieri, Turin
Italy
+39 011 647 6525 (Phone)
+39 011 640 3680 (Fax)

Michele Belloni

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

Center for Research on Pensions and Welfare Policies (CeRP) ( email )

Via Real Collegio, 30
Moncalieri, Turin 10024
Italy

Netspar

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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