Self-employment in Italy: the role of Social Security Wealth

Margherita Borella and Michele Belloni

Journal of Pension Economics and Finance, 2019, vol. 18, issue 1, 31-65

Abstract: Using a rich micro dataset drawn from administrative archives, we explore whether Social Security Wealth (SSW) is an important factor affecting the decision to become self-employed. We focus on the two main categories of self-employed professions covered by the Italian public pension system: craftsmen and shopkeepers. We use the large exogenous variation in individual expected SSW that occurred as a result of the policy reform process undertaken in Italy during the 1990s to identify the effect of this variable and we study how the probability of being self-employed or employed depends, amongst other things, on the difference in the expected SSW that accrues under the two alternative employment scenarios. Our key finding is that a higher difference in expected SSW from self-employment compared with employment has a positive effect on the probability of being self-employed and on the probability of switching to self-employment, whereas it has a negative effect on the probability of switching from self-employment to employment.

Date: 2019
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Working Paper: Self-Employment in Italy: the Role of Social Security Wealth (2016)
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