Restructuring Italian Utility Markets: Household Distributional Effects

Competition in public utility sectors has been encouraged in recent years throughout Europe. In this paper we try and analyse the welfare effects of these reforms in Italy, with particular attention to water and energy goods. The first step is to introduce a sensible measure of affordability of public utilities and to see how many households fall below a critical threshold. This issue is analysed stressing how climatic conditions dramatically affect households’ expenditure and how the affordability of utility bills varies a lot from region to region. So far, utilities’ reforms do not seem to have produced negative effects on the weaker group of households.Consumer behaviour, Public utilities, Regulation, Gas, Electricity, Water

Is there a retirement consumption puzzle in Italy?

In this paper we investigate the way consumption changes around retirement in Italy. Using micro data covering the 1985-96 period, we find that consumption age patterns are similar to those found in the US and other developed countries, despite the much more wide-spread cohabitation of different generations. We also document the existence of a one-off drop in consumption at retirement of the household head, as in the UK and the US, and find that consumption of work-related goods falls around retirement age and home production of food and other goods increases. Given that we can provide evidence that Italian households who retired over the sample period knew reasonably well what their pension income would be, the only reason why forward looking consumers should reduce spending around retirement is because of their increased consumption of leisure. We do find evidence that the abrupt falls in total non-durable consumption at retirement disappear when leisure is taken into account, in agreement with the predictions of the life-cycle theory. This finding is robust to the way consumption is attributed to different household members, and to exclusion of non-nuclear households from the analysis.

Technology, Skills and Retirement

In our work we study the role of Information and Communication Technology (ICT) skills and their utilization in the retirement decision. We provide empirical evidence based on Italian panel data in favour of the hypothesis that - ceteris paribus - better educated male employees with ICT know-how retire later. Such effect is stronger the longer the time horizon considered, and its magnitude is remarkably larger than the one observed in US and Germany in previous studies. We also document that ICT do not play a crucial role in the retirement decision of women. Our results are robust to the estimation strategy adopted.retirement, skill-biased technological change

What do we learn from recall consumption data?

In this paper we use two complementary Italian data sources (the 1995 Istat and Bank of Italy household surveys) to generate household-specific non-durable expenditure in the Bank of Italy sample that contains relatively high-quality income data. We show that food expenditure data are of comparable quality and informational content across the two surveys, once heaping, rounding and time averaging are properly accounted for. We therefore depart from standard practice and rely on the estimation of an inverse Engel curve on Istat data to impute non-durable expenditure to Bank of Italy observations, and show how these estimates can be used to analyse consumption age profiles conditional on demographics. Our key result is that predictions based on a standard set of demographic and socioeconomic indicators are quite different from predictions that also condition on simulated food consumption, in the sense that their age profile is less in line with the implications of the standard consumer intertemporal optimization problem.recall errors, heaping and rounding, multiple imputations and consumption

Distributional effects of price reforms in the Italian utility markets

In this paper we analyse some distributional effects of the reforms of water and energy services in Italy. We first document the new regulation setting in these services, illustrating the dynamics of utility prices and of household expenditure in the period 1998-2005. We then propose a way to measure the affordability of public utilities, in order to investigate how many households would incur a potentially excessive burden, if they consumed a minimum quantity of utility services. Finally, we calculate this index on data from the ‘Survey on Family Budgets’. Our results show how the affordability of utility bills varies from region to region depending on climate, income, family endowment and size. The analysis – also based on a counterfactual exercise – finds that so far, utility reforms do not seem to have produced any negative effects on weaker households.Affordability, Public Utilities, Regulation, Gas, Electricity, Water

Social Preferences and Strategic Uncertainty: An Experiment on Markets and Contracts

This paper reports experimental evidence on a stylized labor market. The experiment is designed as a sequence of three phases. In the rst two phases, P1 and P2; agents face simple games, which we use to estimate subjects social and reciprocity concerns, together with their beliefs. In the last phase, P3; four principals, who face four teams of two agents, compete by o¤ering agents a contract from a xed menu. Then, each agent selects one of the available contracts (i.e. he "chooses to work" for a principal). Production is determined by the outcome of a simple effort game induced by the chosen contract. We nd that (heterogeneous) social preferences are signi cant determinants of choices in all phases of the experiment. Since the available contracts display a trade-of between fairness and strategic uncertainty, we observe that the latter is a much stronger determinant of choices, for both principals and agents. Finally, we also see that social preferences explain, to a large extent, matching between principals and agents, since agents display a marked propensity to work for principals with similar social preferences

Social Preferences and Strategic Uncertainty: An Experiment on Markets and Contracts

This paper reports experimental evidence on a stylized labor market. The experiment is designed as a sequence of three phases. In the rst two phases, P1 and P2; agents face simple games, which we use to estimate subjects social and reciprocity concerns, together with their beliefs. In the last phase, P3; four principals, who face four teams of two agents, compete by o¤ering agents a contract from a xed menu. Then, each agent selects one of the available contracts (i.e. he "chooses to work" for a principal). Production is determined by the outcome of a simple effort game induced by the chosen contract. We nd that (heterogeneous) social preferences are signi cant determinants of choices in all phases of the experiment. Since the available contracts display a trade-of between fairness and strategic uncertainty, we observe that the latter is a much stronger determinant of choices, for both principals and agents. Finally, we also see that social preferences explain, to a large extent, matching between principals and agents, since agents display a marked propensity to work for principals with similar social preferences

Social Preferences and Strategic Uncertainty: An Experiment on Markets and Contracts

This paper reports experimental evidence on a stylized labor market. The experiment is designed as a sequence of three phases. In the first two phases, P1 and P2; agents face simple games, which we use to estimate subjects' social and reciprocity concerns, together with their beliefs. In the last phase, P3; four principals, who face four teams of two agents, compete by offering agents a contract from a fixed menu. Then, each agent selects one of the available contracts (i.e. he "chooses to work" for a principal). Production is determined by the outcome of a simple effort game induced by the chosen contract. We find that (heterogeneous) social preferences are significant determinants of choices in all phases of the experiment. Since the available contracts display a trade-off between fairness and strategic uncertainty, we observe that the latter is a much stronger determinant of choices, for both principals and agents. Finally, we also see that social preferences explain, to a large extent, matching between principals and agents, since agents display a marked propensity to work for principals with similar social preferences.social preferences; team incentives; mechanism design; experimental economics

Toward defining and measuring the affordability of public utility services

This paper reviews the progress made in the literature toward defining and measuring the affordability of utilities. It highlights the relative merits of alternate affordability metrics; the practical challenges to their operationalization, including the underlying data requirements; and their implications for the design, evaluation, and implementation of appropriate affordability programs.Access to Finance,Economic Theory&Research,Town Water Supply and Sanitation,Public Sector Economics&Finance,Rural Poverty Reduction