Youth Unemployment and Retirement of the Elderly: the Case of Italy

This paper shows that the “lump of labor” assumption fails in Italy. The direct relationship between the unemployment rate of the young and the labor force participation of the old is pro-cyclical, i.e. a higher labor force participation of the old is related to a lower unemployment rate of the young. Hence both vary with the business cycle. In order to overcome endogeneity problems in explaining unemployment of the young, we resort to a simulated variable: “the inducement to retire”, which is constructed by simulating the social security benefits. We related the unemployment rate of the young to this incentive measure and find that a higher inducement to retire is associated to a higher unemployment rate – quite the opposite of the “young-in-old-out” story.lump of labour, youth unemployment, early retirement

An Empirical Micro Matching Model with an Application to Italy and Spain

A large literature investigates the role of frictions in explaining labour market dynamics. Their presence is often summarized by an aggregate matching function relating the number of job matches to total unemployment and total vacancies. Most empirical specifications, however, are only reduced forms with no micro-foundation. Further, for many countries, empirical research on the matching function cannot be carried out because data on vacancies are simply not available. This paper looks at a job match as a transition from non-employment to employment. This transition is decomposed into two parts, one determined by the matching technology and one by individual search intensity. We show how the micro-founded model of Pissarides (1979) can be identified using only microdata on labour market transitions. This enables us to obtain a measure of market tightness even without information on the demand side of the market. The method is then applied to estimating the Italian and Spanish matching functions using data from the quarterly labour force surveys.Matching function, market tightness, labour market transitions, search intensity

Early-life environment, eight and BMI of young adult males in Italy

This paper studies the relationship between the two main dimensions of early-life environment, namely disease burden (measured by infant mortality) and economic conditions (measured by income or consumption per capita), and height and body-mass index (BMI) of recent cohorts of young adult males in Italy. By combining high-quality micro-level data on height and weight with regional- and province-level information, we are able to link individual height and BMI at age 18 to regional and provincial averages of environmental variables in the year of birth. Our results are consistent with the hypothesis that, in rich low-mortality setting, the scarring effects of childhood disease dominate selection. We also show that both income and disease matter, and their relative importance differs depending on the outcome considered and the available background information. In particular, we find that income matters more than disease for height, while the opposite is true for BMI. Finally, using detailed province-level information, we show that income per capita is a proxy for a variety of environmental indicators that are highly correlated with economic conditions.Body height, BMI, obesity, income, infant mortality

Survey response and survey characteristics: Micro-level evidence from the ECHP

This paper presents some micro-level evidence on the role of the socio-demographic characteristics of the population and the characteristics of the data collection process as predictors of survey response. Our evidence is based on the public use files of the European Community Household Panel (ECHP), a longitudinal household survey covering the countries of the European Union, whose attractive feature is the high level of comparability across countries and over time. We use individual-level information to predict response in the next wave given response in the current wave, focusing on how the probabilities of contact failure and refusal to cooperate vary with the socio-demographic composition of the national populations and the characteristics of the data collection process. We model the response process as the outcome of two sequential events; (i) the contact between the interviewer and an eligible interviewee, and (ii) the cooperation of the interviewee. Our model allows for dependence between the ease of contact and the propensity to cooperate, taking into account the censoring problem caused by the fact that we observe whether a person is a respondent only if she has been contacted.Panel data, survey response, bivariate probit model.

Fiscal Implications of Pension Reforms in Italy

In this paper, we contribute to the current debate on the Italian pension system by analyzing the impact of social security reforms, in terms of both budgetary implications and distributional effects. This is done by simulating the effects of three hypothetical reforms, plus the effects of the 1995- reform of the Italian pension system (the so-called Dini reform). Our approach relies on the use of a semi-structural econometric model to predict retirement probabilities under different policy scenarios, so as to properly take into account the behavioral effects of the reforms. On the basis of the estimated retirement model, we develop a complete accounting exercise which includes not only changes in gross future benefits due to policy changes, but also changes in social security contributions, income taxes and value added taxes. Thus, our results provide not only estimates of the workers’ gains or losses, but also an exhaustive evaluation of the gains and losses for the government budget. We find that the reforms, particularly the Dini reform (once fully phased in), have a substantial impact on individuals’ retirement decisions and their net social security wealth, as well as substantial gains for the government finances.Social security budget, early retirement, fiscal effects of pension reforms

Earnings Inequality in International Perspective

The increase in dispersion of personal earnings in the USA has received considerable attention and has been analyzed extensively. The evidence for other countries is less systematic. There are a few comparative studies, but they tend to focus on descriptions of the overall distribution of income or earnings. This paper compares the USA with other countries in order to understand whether the US experience is relatively unique or is instead part of a global (or perhaps industrial countries) phenomenon. The paper is mainly descriptive and relies on the empirical evidence from the micro-data of the Luxembourg Income Study (LIS), spanning a period of about twenty years from the mid 1970s to the mid 1990s. It focuses on personal earnings, as opposed to personal or household income, and looks at two main determinants of the changes in the distribution of earnings at the aggregate level, namely changes in between-group and within-group dispersion, as well as the relationship between changes in relative wages and in relative employment. Grouping of the population is based on gender, age and educational attainments. Our main empirical finding is that most of the stylized facts known to hold for the USA also hold for a large majority of the countries included in the LIS database. Therefore, far from being unique, the US experience appears to be part of a phenomenon that is common to many developed countries

Informality and social protection : preliminary results from pilot surveys in Bulgaria and Colombia.

There is a wide agreement on the fact that a large informal economy leaves many individuals without social protection and reduces government's tax revenue and social security contributions. However, it remains an open question what really drives informality, namely whether workers are simply trapped out of the formal sector or, at least some of them, choose it because it offers better alternatives than a formal job. The policy implications are clearly different in the two cases. In order to shed light on this important issue, the authors propose a household survey instrument to assess the links between informality and social protection. It can be implemented either through a stand-alone survey or by adding a specific module to an existing general survey such as the World Bank's Living Standards Measurement Study. After describing the main survey instrument, the study presents the results of two pilot surveys, carried out in Bulgaria and Colombia, to test the effectiveness of the questionnaire and improve its design. After the introduction is presented, the remainder of the paper is organized as follows. Section 2 discusses the design of the basic questionnaire on the informal sector. Since the instrument can be used also as a stand-alone survey, some questions are quite standard both in their content and format: in what follows, the study will focus on the parts that are not. Section 3 describes in detail the pilot surveys and the adaptation of the questionnaire to country-specific issues. Section 4 asks how representative is the sample of the two pilots. Section 5 presents some descriptive results emerging from the two pilots, and Section 6 examines how results differ according to informality status of respondents. Finally, Section 7 offers concluding remarks.,Access to Finance,Labor Markets,Population Policies,Labor Policies