Abstract

The long-term evolution of the social security system is a crucial policy issue in terms of financial sustainability and indeed of adequacy, facing governments with a difficult trade-off. The particular complexity of this issue, also in the light of demographic dynamics and the recent economic crisis, is prompting the development of microsimulation models to analyse the distributive effects of pension reforms. Presented in this study is a dynamic microsimulation model, t-dymm, with which it is possible to investigate the distributive aspects associated with reforms in the social security system, exploiting the information of microdata on which it is based. In fact, the new database upon which the model is constructed, ad-silc, enables detailed estimates of the parameters guiding the workers' choices and their transitions between various conditions of employment. A number of simulations are presented on the distributive effects of the latest changes in legislation affecting the Italian pension system.