Distributive Properties of Pensions Systems: A Simulation of the Italian Transition from Defined Benefit to Notional Defined Contribution

Margherita Borella and Flavia Coda Moscarola

Giornale degli Economisti, 2006, vol. 65, issue 1, pages 95-126

Abstract: We analyse the distribution of pension benefits induced by pension systems moving from a defined benefit formula to a notional defined contribution one. We focus on the reforms that took place in Italy between 1992 and 2004, differently affecting various cohorts of workers. We develop a micro-simulation model that enables to compute pension benefits for heterogeneous individuals belonging to different cohorts, according to pre- and post-reform rules. We find that the defined benefit system is highly redistributive along many dimensions, not just earnings. With the phasing in of the NDC system, redistribution in all dimensions is gradually reduced.

Keywords: public pensions; redistribution (search for similar items in EconPapers)
JEL-codes: D31 H55 (search for similar items in EconPapers)
Date: 2006
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