Leader: Monica Paiella (INPS); Danilo Cavapozzi (UNIVE); Other collaborator(s): Rosa Casillo (UNINA)
Derive dedicated inequality measures at older ages. Make use of micro-data and longitudinal data on socio-economic characteristics to develop indexes of inequalities based on several dimensions of life: income, permanent income and wealth.Measure the “pension gap”, i.e. situations of poverty in old age due to lack of resources or lack of information.
Brief description of the activities and of the intermediate results:
WP4 provides an empirical assessment of life-course welfare interventions. The goal is to identify the profile of older individuals with inadequate welfare coverage, jeopardizing their financial inclusion and increasing their poverty risk, and, importantly, to design policy prescriptions to intervene at earlier stages of the life-course to preserve their current and future financial well-being. A typical example of life-course interventions is the architecture of the pension system (e.g. age-eligibility rules, number of years of contribution required, benefit computation). Administrative data available at INPS (National Social Security Institute) for the period 1995-2022 allow researchers to define the profile of retirees at risk of poverty and show to what extent this is significantly correlated with the characteristics of their labour market careers (e.g. wages unemployment spells, timing of retirement). Use is made of synthetic cohort techniques to study the evolution of retirement decisions and income by birth cohorts which have been affected by the various pension reforms at different stages of their lives. The combination of micro-level and longitudinal information on socio-economic characteristics allows the team to develop indexes of inequalities based on several dimensions of life income, permanent income and wealth, and measurement of the “pension gap”.
Main policy, industrial and scientific implications:
1. Use of administrative data on the universe of Italian retirees and of synthetic cohort techniques to characterize the evolution of absolute and relative gender inequality in retirement income and linking of the evidence to the reforms of the social security system undertaken over the past 30 years.
2. Visitinps Scholarship assignment for a research on: “Assessing the redistributive properties of the Italian pension system”. Preliminary results available also in Working papers.
Future developments in a Working paper on the “The redistributive properties of the Italian pension system”.
Brief description of the activities and of the intermediate results:
1. Focus on the design of policies and benefit provisions for old age. Preliminary estimates, based on individual-level data, show that inadequate local services push families to buy care, reducing family income and worsening poverty among low-income seniors.
2. "Integrated welfare" studies look at the welfare value of pension contracts that take account of the situation of couples. This requires computing and forecasting longevity improvements and mortality dependence within couples.
3. "Saving for Retirement" research looks at economic shocks and shows that effective insurance for old age should cover consumption expenditures, but also exceptional medical expenses.
Brief description of the activities and of the intermediate results:
Using administrative data to analyze the gender gap in retirement income for various cohorts of Italian retirees
Using administrative data on the universe of Italian retirees and synthetic cohort techniques the team has characterized the evolution of absolute and relative gender inequality in retirement income between 1995 and 2022 and published the results in Social Insurance. Theory and Practice 158 (3), 2023. A selection of the results has been included in the article titled 'Risks and Opportunities for the Silver Economy: A Research and Policy Agenda,' contributed by researchers from Spoke 6 to the special issue of The Journals of Gerontology dedicated to the research conducted as part of the AGE-IT project. In addition, the evidence presented in this research has been linked to the reforms of the social security system undertaken over the past 30 years and results are being published in a special issue of Il Mulino on gender inequalities. Results available also in Working papers.
As part of Visitinps research (Scholarship assigned in 2023) “Assessing the redistributive properties of the Italian pension system”, the team has completed the first stage which involved selecting the sample for the analysis and calculating gender-specific summary statistics. These include replacement rates of pensions relative to labour income, as well as inequality measures for retirement, labour income and years of contributions. Additionally, a Pension Fragility Index is being developed to identify the individual or household characteristics that can help pinpoint workers most at risk of falling into poverty after retirement.
Brief description of the activities and of the intermediate results:
In the past twenty years, the Italian labor market has undergone a profound socio-cultural transformation that has actively involved women. This article aims to evaluate how these changes have affected the gender gap in pension incomes. The perspective is cohort-based, aligning with the approach adopted for reforms aimed at minimizing behavioral distortions in retirement choices.
"Assessing the redistributive properties of the Italian pension system", Koray Aktas, Danilo Cavapozzi and Monica Paiella. Based on a sample of retirees drawn from administrative individual-level data on the Visitinps platform, our analysis consists of (i) exploring the individual-level heterogeneity in the factors determining the replacement rate; (ii) predicting replacement rate profiles for fictitious representative agents; (iii) comparing inequality measures and income ranking statistics before and after retirement.
Main policy, industrial and scientific implications:
Based on the analysis conducted, it emerges that over the past 30 years, the gender gap in pension incomes from private-sector employees and self-employed artisans and merchants, calculated as the ratio of the difference between men's and women's pensions relative to men's pensions, has decreased from approximately 44% to 37%.
"Assessing the redistributive properties of the Italian pension system", Koray Aktas, Danilo Cavapozzi and Monica Paiella. Our project is aimed at assessing how the replacement rate defined by the pension rules in place at the time of retirement (i) preserves the adequacy of the benefits defined by the pension system for different groups of workers and (ii) shapes inequality in pension benefits by redistributing resources to preserve worse off workers from poverty risk.
Brief description of the activities and of the intermediate results:
"Assessing the redistributive properties of the Italian public pension system", by Koray Aktas, Danilo Cavapozzi and Monica Paiella: Our aim is to understand whether and to what extent the Italian public pension scheme determines pension benefits reducing inequalities between low and high income workers. Redistribution in pension benefits is mainly governed by the replacement rate, the proportion of labour income covered by pension benefits. Based on individual-level INPS administrative data, we (i) explore the redistributive properties of the Italian pension system at the time of retirement, (ii) document heterogeneity in individual-level determinants of replacement rate, (iii) predict replacement rate profiles to assess the adequacy of the benefits defined by the pension system for different groups of workers.
Main policy, industrial and scientific implications:
"Assessing the redistributive properties of the Italian public pension system", by Koray Aktas, Danilo Cavapozzi and Monica Paiella: There is a sizeable gender gap in the first quartile (68% for men and 54% for women) and the median (77% for men and 71% for women) of the replacement rate distribution. The third quartile is around 80% for both genders. This gender gap can be explained by gender differences in contribution history. The proportion of labour income covered by pension income is substantially higher for low income workers. It remains flat in the middle part of the labour income distribution and decreases for workers in the right tail of labour income. Our results show variations in the replacement rate of the retirees in our reference population associated with variations in the length of contribution histories, holding the other control factors, including labour income, constant.
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