Individual heterogeneity and pension choices

Evidence from Italy

Giovanni Gallo, C. Torricelli, Arthur van Soest

Research output: Contribution to journalArticleScientificpeer-review

Abstract

The 2007 Italian pension reform allowed transferring future severance pay contributions into a pension fund. Although this was accompanied by an information campaign advising employees to make the transfer, only a minority of them did so. We analyze the heterogeneity in employees’ choices using micro panel data from the Bank of Italy household survey. Two are the main findings. First, the decision to transfer and pension fund participation after the reform are more likely for more (financially) educated and older individuals, with high household income and wealth, and less likely for female employees, in the South, and in small firms. Second, framing the analysis within the Elaboration Likelihood Model highlights that the cognitive processes underlying the decision on pension fund participation may be quite different. The decision consciousness is lower for employees working in small firms, where employers have an incentive to stimulate workers to deny the transfer.
Original languageEnglish
Pages (from-to)260-281
JournalJournal of Economic Behavior & Organization
Volume148
DOIs
Publication statusPublished - Apr 2018

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Italy
Employees
Pensions
Pension funds
Participation
Small firms
Household wealth
Household survey
Cognitive processes
Severance pay
Pension reform
Household income
Employers
Minorities
Workers
Consciousness
Incentives
Elaboration likelihood model
Panel data

Keywords

  • pension savings
  • severance pay
  • financial literacy
  • elaboration likelihood model
  • cognitive skills

Cite this

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abstract = "The 2007 Italian pension reform allowed transferring future severance pay contributions into a pension fund. Although this was accompanied by an information campaign advising employees to make the transfer, only a minority of them did so. We analyze the heterogeneity in employees’ choices using micro panel data from the Bank of Italy household survey. Two are the main findings. First, the decision to transfer and pension fund participation after the reform are more likely for more (financially) educated and older individuals, with high household income and wealth, and less likely for female employees, in the South, and in small firms. Second, framing the analysis within the Elaboration Likelihood Model highlights that the cognitive processes underlying the decision on pension fund participation may be quite different. The decision consciousness is lower for employees working in small firms, where employers have an incentive to stimulate workers to deny the transfer.",
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Individual heterogeneity and pension choices : Evidence from Italy. / Gallo, Giovanni; Torricelli, C.; van Soest, Arthur.

In: Journal of Economic Behavior & Organization, Vol. 148, 04.2018, p. 260-281.

Research output: Contribution to journalArticleScientificpeer-review

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