Sartor, N. (2001),

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



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.