Sartor, N. (2001),

The Long-run Effects of the Italian Pension Reforms. International Tax and Public Finance, vol. 8.

 

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.