The strengths and failures of incentive mechanisms in notional defined contribution pension systems

Public pension systems based on the Notional Defined Contribution (NDC) principle were introduced during the ‘90s in Italy, Sweden and Poland, among other countries. They mimic private savings, in that individuals get back, as pensioners, what they contributed to social security during working life, plus returns. As such, NDC systems should realize actuarial equity and incentive neutrality. However, when one considers the presence of NDC pensions together with minimum and social assistance pensions, this is no longer true. Indeed, in all the three countries considered, the NDC system shows a regressive feature, which disincentivizes contributions, particularly from low earners, who would be better off entering, or staying in, the shadow economy. In order to reduce the extent of this phenomenon, we examine the effects of introducing, or increasing, the possibility of accumulation of social assistance and NDC pensions, which would also improve pension adequacy. A complete accumulation of the two would solve the incentive problem, but would be costly and would require a structural reform of the pension system financing mechanism, altering the current balance between social contributions and general fiscal revenues. We show the effects of a change in the cumulation rules for social assistance and NDC pensions in Italy using CAPP_DYN, a population-based dynamic microsimulation model, which allows assessment of the evolution of the pension system in the coming decades and the distributional implications of such reform.

Pension reforms, educational choices and the long term dynamic of the employment in Italy

In this paper we use CAPP_DYN, a population based dynamic microsimulation model to simulate the Italian employed population during the period 2005-2050. We find that the more interesting changes will affect the composition rather than the level of the employed population. We investigate main factors that are at work (cohorts effects, educational choices and pension reforms). Finally we present some sensitivity analyses to tes

Investigating the potentials and limitations of capillary-fed vapor generators: A heat and mass transfer study

Passive fluid transport, which plays a crucial role in a wide range of processes from engineering to biology field, is becoming increasingly attractive due to the prospect of a lower energy demand. Here, we focus the attention on passive thermal evaporation, which is considered an emerging and promising water treatment technique. In detail, we report an extensive theoretical study of capillary-driven fluid flow in hydrophilic and porous materials to be used as thermal evaporators in water treatment devices such as vapor generators or distillers. These materials are designed to spontaneously and properly soak up the water to be treated and absorb thermal energy, establishing a continuous vapor generation. Design guidelines are reported and extensively discussed with the aim of preventing dry-out phenomena, which could compromise the correct functioning of the component and limit the performance. The results presented here envision a potential component size on the order of meters, which is, to the best of our knowledge, two orders of magnitude more than the size effectively explored in the experimental tests reported in the recent literature. Moreover, this modelling framework may be leveraged to assist innovation actions on materials and/or manufacturing techniques, further increasing the competitiveness and the widespread deployment of passive and sustainable solutions

Effect of water nanoconfinement on the dynamic properties of paramagnetic colloidal complexes

The anomalous behavior of confined water at the nanoscale has remarkable implications in a number of nanotechnological applications. In this work, we analyze the effect of water self-diffusion on the dynamic properties of a solvated gadolinium-based paramagnetic complex, typically used for contrast enhancement in magnetic resonance imaging. In particular, we examine the effect of silica-based nanostructures on water behavior in the proximity of the paramagnetic complex via atomistic simulations, and interpret the resulting tumbling dynamics in the light of the local solvent modification based on the Lipari-Szabo formalism and of the fractional Stokes-Einstein relation. It is found that the local water confinement induces an increased "stiffness" on the outer sphere of the paramagnetic complex, which eventually reduces its tumbling properties. These model predictions are found to explain well the relaxivity enhancement observed experimentally by confining paramagnetic complexes into porous nanoconstructs, and thus offer mechanistic guidelines to design improved contrast agents for imaging applications

Estimating the additional costs of living with a disability in the United Kingdom between 2013 and 2016

In the United Kingdom, more than 20% of the population live with a disability. Past evidence shows that being disabled is associated with functional limitations that often cause social exclusion and poverty. Therefore, it is necessary to analyse the connection between disability and poverty. This paper examines whether households with disabled members face extra costs of living to attain the same standard of living as their peers without disabled members. The modelling framework is based on the standard of living approach which estimates the extra income required to close the gap between households with and without disabled members. We apply an ordered logit regression to data from the Family Resources Survey between 2013 and 2016 to analyse the relationship between standard of living, income, and disability, conditional on other explanatory variables. We find that households with disabled members face considerable extra costs that go beyond the transfer payment of the government. The average household with disabled members saw their weekly extra costs continually increase from £293 in 2013 to £326 in 2016 [2020 prices]. Therefore, the government needs to adjust welfare policies to address the problem of extra costs faced by households with disabled members

Disability Costs and Equivalence Scales in the Older Population in Great Britain

We use a standard of living (SoL) approach to estimate older people's disability costs, using data on 8000 individuals from the U.K. Family Resources Survey. We extend previous research in two ways. First, by allowing for a more flexible relationship between SoL and income, the structure of the estimated disability cost and equivalence scale is not dictated by a restrictive functional form assumption. Second, we allow for the latent nature of disability and SoL, addressing measurement error in the disability and SoL indicators in surveys. We find that disability costs are strongly related to severity of disability, and vary with income in absolute and proportionate terms. Older people above the median disability level require an extra £99 per week (2007 prices) on average to reach the SoL of an otherwise similar person at the median. Costs faced by older people in the highest decile of disability average £180

Public Support for Older Disabled People: Evidence from the English Longitudinal Study of Ageing on Receipt of Disability Benefits and Social Care Subsidy

In England, state support for older people with disabilities consists of a national system of non-means-tested cash disability benefits and a locally administered means-tested system of social care. Evidence on how the combination of the two systems targets those in most need is lacking. We estimate a latent factor structural equation model of disability and receipt of one or both forms of support. The model integrates the measurement of disability and its influence on receipt of state support, allowing for the socio-economic gradient in disability, and adopts income and wealth constructs appropriate to each part of the model. We find that receipt of each form of support rises as disability increases, with a strong concentration on the most disabled, especially for local-authority-funded care. The overlap between the two programmes is confined to the most disabled. Less than half of recipients of local-authority-funded care also receive a disability benefit; a third of those in the top 10 per cent of the disability distribution receive neither form of support. Despite being non-means-tested, disability benefits display a degree of income and wealth targeting, as a consequence of the socio-economic gradient in disability and likely disability benefit claims behaviour. The scope for improving income/wealth targeting of disability benefits by means testing them, as some have suggested, is thus less than might be expected