Micro-Modeling of Retirement Behavior in Italy
Micro-Modeling of Retirement Behavior in Italy
This chapter presents an empirical analysis of the retirement decisions of Italian workers. It emphasizes the role played by dynamic incentives that are built in the social security system, which encourage (or discourage) retirement. The results suggest that incentives are important in explaining retirement decisions, although the interaction of age and dynamic incentives is rather complex. The chapter is organized as follows. Section 6.2 reviews the recent situation of the Italian social security system in terms of expenditure trends and financial viability. It also describes recent institutional changes and labor market trends. Section 6.3 describes the available data and discusses the methodology and the results of estimating age-earnings profiles. Section 6.4 looks at the definitions of the incentive variables and highlights some of the methodological issues involved in computing these measures in our sample. Finally, Section 6.5 presents the results of the econometric exercise, as well as the results of the simulations.
Keywords: retirement incentives, Italian workers, social security system, institutional changes, labor market
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