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Workers' Choice on Pension Schemes: an Assessment of the Italian TFR Reform Through Theory and Simulations

Lorenzo Corsini (), Pier Mario Pacini and Luca Spataro ()

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: In this paper we aim at providing a theoretical framework to model workers' choice problem of switching between different pension schemes. This choice problem is common in several countries that have reformed their social security system in the last decades. Although with some specific features, such process is currently a ecting private sector employees in Italy, since the reform of the TFR mechanism in 2007. This reform basically allows workers to choose between a scheme directly managed by the firms and an external defined contribution scheme. In their decision workers not only have to weight out the different pros and cons that different schemes o er but they also have to consider the effect that their choice exerts on the financial structure of the firm they work in. Once we have formalized this decision problem, we carry out some simulations in order to replicate the Italian data and to shed some light on the outcomes of the Italian reform.

Date: 2010-01-18
New Economics Papers: this item is included in nep-age, nep-cmp and nep-lab
Note: ISSN 2039-1854
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