TY  - UNPD
A1  - Jappelli, Tullio
A1  - Padula, Mario
T1  - The consumption and wealth effects of an unanticipated change in lifetime resources
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 507
N2  - In 2000 Italy replaced its traditional system of severance pay for public employees with a new system. Under the old regime, severance pay was proportional to the final salary before retirement; under the new regime it is proportional to lifetime earnings. This reform entails substantial losses for future generations of public employees, in the range of €20,000-30,000, depending on seniority. Using a difference-in-difference framework, we estimate the impact of this unanticipated change in lifetime resources, on the current consumption and wealth accumulation of employees affected by the reform. In line with theoretical simulations, we find that each euro reduction in severance pay reduces the average propensity to consume by 3 cents and increases the wealth-income ratio by 0.32. The response is stronger for younger workers and for households where both spouses are public sector employees.
T3  - CFS working paper series - 507 
KW  - Severance Pay
KW  - Consumption
KW  - Wealth Accumulation
Y1  - 2015
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/38254
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-382541
UR  - http://ssrn.com/abstract=2621387
IS  - June 2015
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -