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T-DYMM : the treasury dynamic microsimulation model of the Italian pension system

Author

Listed:
  • Alessandra Caretta
  • Sara Flisi
  • Cecilia Frale
  • Michele Raitano
  • Simone Tedeschi
Abstract
The long-term development of the social security system is a crucial policy issue in terms of both financial sustainability and adequacy, which constitute a difficult trade-off facing the policy maker. The particular complexity of this issue, also in the light of demographic dynamics and the recent economic crisis, has encouraged the development of dynamic microsimulation models as to analyse the distributive effects of pension reforms in the long run. This study presents T-DYMM, a dynamic microsimulation model developed within a European funded project runned by the Treasury Department of the Italian Ministry of the Economy and Finance in collaboration with the Fondazione G. Brodolini. The distinct character of T-DYMM compared to other models is, above all, its innovative dataset, Ad-SILC, which includes microdata needed to estimate conditional probabilities of transitions across alternative employment states and parameters of wage equations. The estimated coefficient are then used to simulate transition probabilities in T-DYMM and wage dynamics, taking into account fragile careers. A number of simulations are presented on the distributive effects related to the latest legislative changes affecting the Italian pension system. To better exploit adequacy concerns, replacement rates are shown after personal income taxation, long run poverty rates are projected as well as trends of beneficiaries of social assistance allowance and minimum pension supplement as a ratio of total pensioners.

Suggested Citation

  • Alessandra Caretta & Sara Flisi & Cecilia Frale & Michele Raitano & Simone Tedeschi, 2013. "T-DYMM : the treasury dynamic microsimulation model of the Italian pension system," Working Papers 11, Department of the Treasury, Ministry of the Economy and of Finance.
    • Handle: RePEc:itt:wpaper:2013-11
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    References listed on IDEAS

    as
    1. Gijs Dekkers & Richard Cumpston, 2012. "On weights in dynamic-ageing microsimulation models," International Journal of Microsimulation, International Microsimulation Association, vol. 5(2), pages 59-65.
    2. Carlo Mazzaferro & Marcello Morciano, 2008. "CAPP_DYN: A Dynamic Microsimulation Model for the Italian Social Security System," Department of Economics 0595, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    3. Giuseppe Carone, 2005. "Long-Term Labour Force Projections for the 25 EU Member States:A set of data for assessing the economic impact of ageing," Labor and Demography 0512006, University Library of Munich, Germany.
    4. Li, Jinjing & O'Donoghue, Cathal, 2012. "A methodological survey of dynamic microsimulation models," MERIT Working Papers 2012-002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Cathal O'Donoghue & Gijs Dekkers, 2018. "Increasing the Impact of Dynamic Microsimulation Modelling," International Journal of Microsimulation, International Microsimulation Association, vol. 11(1), pages 61-96.
    2. Flavia Coda Moscarola & Margherita Borella, 2015. "The 2011 Pension Reform in Italy and its Effects on Current and Future Retirees," CeRP Working Papers 151, Center for Research on Pensions and Welfare Policies, Turin (Italy).

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    More about this item

    Keywords

    Dynamic Microsimulation; Pensions; Job transitions; Distributive analysis;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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