A case study from Italy – Healthcare Economist

As people live longer, governments and employers are considering increasing the age at which people may become eligible for public or private pensions (for example, Social Security). While these fiscal impacts of changing the retirement age have been well studied, labor market and health outcomes are less known.

an article from Serrano-Alarcón et al. (2023) examines the impact of pension reform in Italy. Italy has a public pension system that is financed through a (pay-as-you-go) mechanism. Income replacement rates have historically been 77%. A 2012 pension reform increased the retirement age so that everyone had the legal retirement age of 67. This policy led to an increase in the retirement age of 7 years (60-67) for women and 2 years (65-67) for women. men.

The authors use data from WHIP: Health is based on the Italian Work History Panel (WHIP), a database of individual work histories derived from a random sample of people insured by the Italian social security administration (INPS). The WHIP-Health data are then linked to public and private hospital discharge data from the National Hospital Discharge Archive. The authors’ empirical strategy compares neighboring cohorts that were differently affected by the reform due to the increase in the legal retirement age (old-age pension). For example, “women born in 1951 were entitled to retire according to the legal retirement age in 2011 at the age of 60…[but] “Women born in 1952 could only apply for a pension from 2015, when they turned 63.”

Using this approach, the authors find that:

Among women alone, the reform also increased sick leave and hospitalizations related to mental health and injuries. These effects were driven by women with previously poor health status, suggesting that undifferentiated and abrupt increases in retirement age could harm the most vulnerable workers. Consistent with the milder retirement age adjustment experienced by men, labor market responses were smaller in size and did not suffer any significant health effects.


You can read the full article. here.

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