Italy and Denmark from Early Retirement to Active Ageing. Problems and Solutions for Structural Unemployment and Pension Funding

Abstract

The article compares the sequences of labour market and pension reforms enacted in Denmark and Italy between 1992 and 2007. In both countries, a common focus on the link between old age insurance and labour market policies fostered a shift from a paradigm based on early retirement and generous benefits to a new one based on active ageing and fairer entitlements within a multi-pillar pension system. What might account for these commonalities?

Following the logic of a most-different systems design, the article looks at the institutional and political mechanisms at work in both cases and suggests three main claims. First, efficiency-enhancing reforms may find a political starter in the interaction between the cleavage structure prevailing in the country and the ability of some political actors to exploit issue ownership on the policies in question. Second, labour market reforms with positive effects on economic output may be more beneficial to the pension system than a major institutional reengineering. Third, the institutional tension between the goals of status maintenance and redistribution may trigger multi-pillarization in systems where occupational fragmentation is strong. Occupationalism, while producing increasing electoral returns, also generates inconsistencies that require a more articulated distribution of tasks among different pillars