Hostname: page-component-586b7cd67f-vdxz6 Total loading time: 0 Render date: 2024-11-24T23:58:23.547Z Has data issue: false hasContentIssue false
  • English
  • Français

The portfolio effect of pension reforms: evidence from Italy

Published online by Cambridge University Press:  29 June 2010

RENATA BOTTAZZI ,
TULLIO JAPPELLI  and
MARIO PADULA
RENATA BOTTAZZI*
Affiliation:
University of Bologna, IFS, and CHILD (e-mail: [email protected])
TULLIO JAPPELLI*
Affiliation:
University of Naples ‘Federico II’, CSEF, and CEPR (e-mail: [email protected])
MARIO PADULA*
Affiliation:
University ‘Ca’ Foscari' of Venice and CSEF (e-mail: [email protected])
*
*Corresponding author.
*Corresponding author.
*Corresponding author.
Get access Rights & Permissions [Opens in a new window]

Abstract

We estimate the portfolio effect of changes in social security wealth exploiting a decade of Italian pension reforms. The Italian Survey of Household Income and Wealth records detailed portfolio data and elicits expectations of retirement outcomes, thus allowing us to measure expected social security wealth and assess to what extent Italian households perceive the innovations brought about by the reforms. We find that households have responded to cuts in pension benefits mostly by increasing real estate wealth, and that this response is stronger among households able more accurately to estimate future social security benefits. We also compute that for the average household consumable wealth increases by 40 percent of the reduction in social security wealth.

Type
Articles
Information
Journal of Pension Economics & Finance , Volume 10 , Issue 1 , January 2011 , pp. 75 - 97
Copyright
Copyright © Cambridge University Press 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Attanasio, Orazio P. and Brugiavini, Agar (2003) Social security and households saving. Quarterly Journal of Economics, 118: 1075–1119.CrossRefGoogle Scholar
Attanasio, Orazio P. and Rohwedder, Susann (2003) Pension wealth and household saving: evidence from pension reforms in the United Kingdom. American Economic Review, 93: 1499–1521.CrossRefGoogle Scholar
Bernheim, Douglas (2002) Taxation and saving. In Alan, Auerbach and Martin, Feldstein (eds.), Handbook of Public Economics. Volume 3, Amsterdam: North-Holland.Google Scholar
Bottazzi, Renata, Jappelli, Tullio, and Padula, Mario (2006) Retirement expectations, pension reforms, and their effect on private wealth accumulation. Journal of Public Economics, 90: 2167–2213.CrossRefGoogle Scholar
Brugiavini, Agar (1999) Social security and retirement in Italy. In Jonathan, Gruber and David, Wise (eds.), Social Security and Retirement around the World. Chicago: The University of Chicago Press.Google Scholar
Cesari, Riccardo, Grandi, Giuseppe, and Panetta, Fabio (2008) Supplementary pension schemes in Italy: features, development and opportunities for workers. Giornale degli Economisti e Annali di Economia, 67: 21–73.Google Scholar
Cocco, João (2005) Portfolio choice in the presence of housing. The Review of Financial Studies, 18: 535–567.CrossRefGoogle Scholar
Cocco, João, Gomes, Francisco J., and Maenhout, Pascal J. (2005) Consumption and portfolio choice over the life cycle. The Review of Financial Studies, 18: 491–533.CrossRefGoogle Scholar
European Mortgage Federation (2006) Hypostat: A Review of Europe's Mortgage and Housing Market. Bruxelles: European Mortgage Federation.Google Scholar
Feldstein, Martin (1974) Social security, induced retirement and aggregate capital accumulation. Journal of Political Economy, 82: 357–374.CrossRefGoogle Scholar
Feldstein, Martin and Pellechio, Anthony (1979) Social security and household accumulation: new microeconometric evidence. Review of Economics and Statistics, 61: 361–368.CrossRefGoogle Scholar
Fornero, Elsa, Fugazza, Carolina, and Ponzetto, Giacomo (2004) A comparative analysis of the costs of Italian individual pension plans. CeRP Working Paper 33, Center for Research on Pensions and Welfare Policies, Turin (Italy).Google Scholar
Gale, William G. (1998) The effect of pension wealth on household wealth: a reevaluation of theory and evidence. Journal of Political Economy, 106: 706–723.CrossRefGoogle Scholar
Guazzarotti, Giovanni and Tommasino, Pietro (2008) The annuity market in an evolving pension system: lessons from Italy. CeRP Working Paper No. 77/08.Google Scholar
Guiso, Luigi, Haliassos, Michalis, and Jappelli, Tullio (2003) Household Portfolios. Cambridge, MA: MIT Press.Google Scholar
Jappelli, Tullio and Pistaferri, Luigi (2003) Tax incentives and the demand for life insurance: evidence from Italy. Journal of Public Economics, 87: 1779–1799.CrossRefGoogle Scholar
Merton, Robert C. (1969) Lifetime portfolio selection under uncertainty: the continuous-time case. Review of Economics and Statistics, 51: 247–257.CrossRefGoogle Scholar
Merton, Robert C. (1971) Optimum consumption and portfolio rules in a continuous-time model. Journal of Economic Theory, 3: 373–413.CrossRefGoogle Scholar
Samuelson, Paul A. (1969) Lifetime portfolio selection by dynamic stochastic programming. Review of Economics and Statistics, 51: 239–246.CrossRefGoogle Scholar
Sinai, Todd and Souleles, Nicholas (2005) Owner-occupied housing as insurance against rent risk. Quarterly Journal of Economics, 120: 763–789.Google Scholar
Sinai, Todd and Souleles, Nicholas (2008) Net worth and housing equity in retirement. In John, Ameriks and Olivia, Mitchell (eds.), Recalibrating Retirement Spending and Saving. Oxford: Oxford University Press.Google Scholar