Essays in Memory of Albert Ando
Edited by Lawrence R. Klein
Chapter 4: Demographic Changes, Reforms to the Social Security System and Private Savings in Italy
4. Demographic changes, reforms to the social security system and private savings in Italy* Sergio Nicoletti-Altimari 1. INTRODUCTION With his seminal work together with Franco Modigliani in 1963, Albert Ando was one of the main contributors to the success of the life-cycle theory, probably one of the most substantial and enduring accomplishments of the economics profession in the second half of the twentieth century. Albert Ando was certainly not, however, a complacent man, and devoted a substantial part of his professional life to the attempt to go beyond that theory and deepen our understanding of the economic life of the society. In particular, he regarded the life-cycle paradigm, at least in its simple, streamlined version, as inadequate to provide an accurate description of the aggregate implications of the very heterogeneous behavior of households that one could observe at the micro level. In the streamlined version of the theory, for example, the aggregate saving rate of a society is mainly the reﬂection of the age distribution of the population, and its evolution over time reﬂects changes in such distribution. As he used to emphasize, however, as soon as we attempt a detailed description of the dependence of the economic behavior of an individual on his/her demographic characteristics, it becomes obvious that the latter depends, not only on age, but also on the nature of the family to which the individual belongs, and on the role he/she plays in the family. Indeed, for economic decisions, in most cases it is...
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