Trends and dynamics in the Italian labour market. An empirical evaluation using RFL data, 1993-2007

The empirical analysis carried out in this paper represents the basis for the construction of the labour market module in the dynamic microsimulation model CAPP_DYN. Using LFS longitudinal data for the period 1993-2007, we describe the recent trends on the Italian labour market and provide an international comparison with other European countries. In order to investigate the determinants of labour market transitions, multinomial logistic regressions are implemented, and the estimated parameters are then used to model transition probabilities in the dynamic microsimulation model.Labour Mobility, Multinomial Logit

Pension reforms, educational choices and the long term dynamic of 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 test our results with respect to different hypotheses regarding the future legal retirement age.

Estimation and Simulation of Earnings in IT-SILC

This paper describes income distribution among workers in Italy using both the cross-sectional and panel component of IT-SILC. We highlight advantages and drawbacks of different econometric approaches, comparing standard OLS estimates with those obtained from Random Effects and Poisson Maximum Likelihood and assessing whether the results are sensitive to the different specification. Finally, we present the procedure in use in simulating future earnings in CAPP_DYN, the dynamic population-based microsimulation model of the CAPPMicrosimulation; Earnings; Lifetime; Inequality; IT-SILC

CAPP_DYN: A Dynamic Microsimulation Model for the Italian Social Security System

Microsimulation allows to apply a set of deterministic or stochastic rules on a sample of micro-unit such as individuals, households, .rms or institutions. A Dynamic Microsimulation Model (DMM) contains a set of rules aiming at projecting the likely socio-economic evolution of a representative sample of individuals throughout time. In this paper, we describe the simulation algorithms and the econom(etr)ic frameworks used in CAPP DYN, a population based DMM for the analysis of the inter- and intra-generational redistributive e.ects of the Italian social security system. By including detailed rules that determine the eligibility to various social security bene.ts, CAPP DYN is quali.ed as a useful tool in assessing the long-run distributional e.ects of the reforms approved in the Italian social security system.Dynamic Microsimulation; Pensions; Long-term care

Trends and dynamics in the Italian labour market. An empirical evaluation using RFL data, 1993-2007

The empirical analysis carried out in this paper represents the basis for the construction of the labour market module in the dynamic microsimulation model CAPP_DYN. Using LFS longitudinal data for the period 1993-2007, we describe the recent trends on the Italian labour market and provide an international comparison with other European countries. In order to investigate the determinants of labour market transitions, multinomial logistic regressions are implemented, and the estimated parameters are then used to model transition probabilities in the dynamic microsimulation modelLabour Mobility; Multinomial Logit

CAPP_DYN: A Dynamic Microsimulation Model for the Italian Social Security System

We present the technical structure of CAPP_DYN, a population based dynamic microsimulation model for the analysis of long term redistributive effects of social policies, developed at CAPP (Centro di Analisi delle Politiche Pubbliche) to study the intergenerational and the intragenerational redistributive effects of reforms in the social security system. The model simulates probabilistically the socio-demographic and economic evolution of a representative sample of the Italian population for the period 2005-2050. After a short review of the existing similar models for the Italian economy, a rather detailed analysis and discussion of the functioning of the model as well as a description of estimation procedures employed in each single module of the models is offered.Dynamic microsimulation; lifetime and intragenerational redistribution; social security systems

Modelling Private Wealth Accumulation and Spend-down in the Italian Microsimulation Model CAPP_DYN: A Life-Cycle Approach

In microsimulation literature a limited number of models include a module aimed at analyzing and projecting the evolution of privat e wealth over time. However, this issue appears crucial in order to comprehensively evaluate the li kely distributional effects of institutional reforms adopted to cope with population ageing. In this work we describe the implementation in the Italian dynamic micro simulation model CAPP_DYN of a new module in which households\u2019 savings and asset allocation are modelled. In parti cular, we aim to account for possible behavioural responses to pension reforms in househo ld savings. To this end, we rely on an approximate life cycle structural framework for est imating saving behaviour, while adopting a traditional stochastic micro simulation approach fo r asset allocation. In line with Ando and Nicoletti Altimari (2004), we emphasize the role of lifetime economic resources in households\u2019 consumption decisions, yet we further account for i nternal habit formation and subjective expectations on pension outcomes in the econometric stage. In addition, we model intergenerational transfers of private wealth in a probabilistic fashio

Measuring intra-generational and inter-generational redistribution in the reformed Italian social security system

Reforms to the Italian social security system, carried out from 1992 onwards, will dramatically change its structure in the long run. So far, empirical research has devoted more attention to their macroeconomic and financial effects while relatively less attention has been paid to analysing their redistributional implications. We present this line of research using CAPP_DYN, a population-based dynamic microsimulation model. The model stochastically simulates the socio-demographic and economic evolution of a representative sample of the Italian population over the period 2010-2050. The initial sample is subjected to a large number of demographic and economic events such as partnership formation/dissolution, birth, education, work, retirement, health and disability and death. While acknowledging the rather complex phasing in of the Notional Defined Contribution system, introduced into the Italian social security system from 1995, a set of indexes (net present value ratio, Gini index, replacement ratios etc.) is used to evaluate the distributional properties of the reformed pension system in each of the simulated years as well as in a life-time/cohort perspective. Two main critical distributional aspects will emerge. Firstly the model predicts an increase in the old-age pensions dispersion in the transitional phase (2015 – 2030) due to the coexistence of different pension regimes and rules in calculating pensions. Moreover, a problem of adequacy in the public pension system from 2035 emerges as the NDC system will be almost completely phased in.

The Introduction of a Private Wealth Module in CAPP_DYN: an Overview

Household saving rate in Italy declined over the last two decades.This trend still persists despite three pension reforms have been enacted since the beginning of the nineties. In this paper we search further evidence of general macroeconomic effects through the analysis of households behaviour. In the first part of the paper we use data from five surveys of the Bank of Italy Surveys of Household Income and Wealth (SHIW) to estimate the lifetime profiles of saving and wealth accumulation. Estimates show that the age profile of the propensity to save has been influenced more by cohort effects than by general trend effects; whereas the age profile of the ratios of financial assets to disposable income has been subject to relevant trend effects. In the second part of the paper we analyse the effects of pension reforms on saving behaviour of Italian Households. Firstly we use a difference-in-difference estimator in order to test whether the groups more severely hit by the reforms actually increased their saving rate relative to the other groups. Then we estimate the Social Security Net Wealth (SSWN) for each individual in the SHIW in the analysed period (1989-2000). Finally we estimate the substitution coefficient between SSWN and private wealth taking into account that the reaction of saving to a change in SSWN depends also on age of the individual. Our results show that the reduction of SSWN is unequally distributed across individuals. The cut is stronger for self employed, young workers and women. Most of the groups more severely hit by the reforms did not increase their saving rate relative to the control group: younger households, in particular, did not increase the saving rate. On the whole a reduction of one Euro in SSWN seems to induce, on the average, a compensating increase in private wealth by about fifty cents. The substitution coefficient between private and social security wealth is higher for the richest and oldest part of the sample. Finally when we split the sample observations by year we find that the more dramatised is the impact of the reform, the higher is the substitution coefficient.Pension reform; household saving; social security wealth; difference-in-difference

Modelling Private Wealth Accumulation and Spend-down in the Italian Microsimulation Model CAPP_DYN: A Life-Cycle Approach

In microsimulation literature a limited number of models are provided with a module aimed at analyzing and projecting the evolution of private wealth over time. However, this issue appears crucial in order to get a comprehensive evaluation of the likely distributional effects of institutional reforms adopted to cope with population ageing. In this work we describe the implementation in the Italian dynamic micro simulation model CAPP_DYN of a new module in which household’s savings and asset allocation are modelled. In particular, our efforts are addressed at accounting for some possible behavioural responses to pension reforms in household savings. To this end, we rely on an approximate life cycle structural framework for estimating saving behaviour, while adopting the traditional stochastic micro simulation approach for assets allocation. In line with Ando and Nicoletti Altimari (2004), we emphasize the role of lifetime economic resources in households’ consumption decisions, yet we further account for internal habit formation and subjective expectations on pension outcomes in the econometric stage. In addition, we model intergenerational transfers of private wealth in a probabilistic fashion. Despite possible saving responses to pension reforms, simulated results for the period 2008-2050 suggest a rising dispersion in saving propensity and intergenerational transfers received are largely responsible for the predicted increase in disposable income inequality in the next decades which, differently from the recent past, will also affect the group of elderly.household consumption, habit formation, pension expectations, social security, intergenerational transfers, income and wealth distribution, microsimulation