## 1. Poverty Reduction Measures

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### Fiscal context and targets
- Headline deficit projections:
  - Decline from 2.1 percent of GDP in 2017 to 1.6 percent of GDP in 2018, 0.9 percent of GDP in 2019, and 0.2 percent of GDP in 2020.
- Structural deficit projections:
  - Decline from about 1.3 percent of GDP in 2017 to 1 percent of GDP in 2018, 0.6 percent of GDP in 2019 and 0.2 percent of GDP in 2020.
- Measures to reach targets:
  - Not specified beyond broad areas: cuts following spending reviews, the fight against tax evasion, and rationalizing tax expenditures.

### Social benefits, poverty programs, and recent reforms
- Social benefits and pensions:
  - Social benefits constitute half of total primary spending (up from 40 percent at euro accession).
  - Pension spending around 16 percent of GDP; second highest in the euro area after Greece.
  - Social benefits increased by about 43 percent cumulatively from 1999 to 2007 and by a further 33 percent since then.
  - Non-pension social benefit spending described as low, fragmented, and poorly targeted; disproportionately low share of social transfers accrues to the low-income working-age population.
- Evolution of poverty-reduction programs:
  - Minimum Insertion Income introduced in 1999 (experimental).
  - Social card introduced in 2008 (emergency), re-designed and broadened in 2011.
  - SAI (Support for Active Inclusion) launched in 2013; extended nationwide in 2016 and eligibility relaxed in 2017.
  - Fund for Combating Poverty and Social Exclusion set up with 2016 Stability Law to introduce a national minimum-income program by 2018.
  - REI (Inclusion Income, Reddito di inserimento) introduced within an enabling law in 2017, replacing SIA and other measures as of January 2018:
    - Expected households covered: increase from 160,000 households under SIA to 660,000 households under REI.
    - Eligibility: households with children under 18 years old, pregnant women, and unemployed people above 65 years of age experiencing economic hardship (an equivalent financial situation index of €6,000 or less, per a top-up formula), based on comprehensive evaluation of need considering both income and wealth.
    - Benefits conditional on a personalized work/social inclusion plan prepared by local administrations, with applicant participation required.
    - REI annual funding, once fully operational, of about €1.8 billion.
- Policy recommendations:
  - Reduce fragmentation of anti-poverty programs and improve targeting.
  - Organize welfare services and improve coordination among social services.
  - Complement with more intense active labor market policies and a modern social safety net.

### Spending composition, efficiency issues, and policy implications
- Long-run spending patterns and levels:
  - From 1999 to 2007, nominal current primary expenditure grew faster than the euro area average and well above Italy’s average nominal potential growth—driven mainly by social benefits (primarily pensions), intermediate consumption, and wages.
  - From 2008 to 2016, nominal current primary expenditure grew at 1.8 percent per year on average, below the euro area average of 2.6 percent.
  - Public sector employees declined from 3.6 million in 2007 to around 3.3 million in 2015.
  - Capital expenditure declined by about 28 percent in nominal terms between 2009 and 2016.
  - Total public expenditure: 50.4 percent of GDP versus euro area average 48.5 percent (about 2 percent of GDP higher), largely reflecting high cost of servicing public debt.
  - Interest on debt was 4.2 percent of GDP in 2015; education spending 4 percent of GDP; defense 1.2 percent of GDP.
- Overspending and efficiency opportunities:
  - Largest overspending relative to euro area average: social benefits (social protection).
  - Interest payments exceed euro area average by 1.6 percent of GDP.
  - Other overspending: intermediate consumption in health; compensation of employees in defense/public order and safety/health; subsidies in economic affairs; capital transfers in general services and economic affairs.
  - Public health spending in aggregate in line with euro area average but skewed toward compensation of employees and intermediate consumption—suggesting efficiency gains at local-government level.
  - Underspending relative to euro area average: education (goods and services and total compensation), especially at tertiary level; gross capital formation.
- Policy recommendations:
  - Rationalize total social benefit spending, especially pensions.
  - Improve targeting of non-pension social benefit spending to those most in need.
  - Improve efficiency of health spending at local level and reallocate spending toward capital spending and education.
  - Continue spending reviews and strengthen centralization/digitization efforts to achieve efficiency (past spending reviews with potential savings up to 0.4 percent of GDP in 2014, 1 percent of GDP in 2015, and 2 percent of GDP in 2016 under proposed actions).

### Pension system: structure, reforms, and quantitative markers
- Historical reforms and transition:
  - Reforms since 1992 include: pro-rata replacement of DB with NDC (1995), periodic mortality-based updates (2007), tightening of eligibility requirements (1992, 1995, 1997, 2004, 2007, 2011), alignment of statutory retirement age for women with men (2010, 2011), and indexation of retirement age to life expectancy.
  - Transition rules based on years of insurance accumulated by end-1995:
    - Insured with at least 18 years of contributions by end-1995: largely maintain DB formula for contributions until 2011; contributions after 2011 subject to NDC.
    - Insured with less than 18 years of contributions by end-1995: pro-rated scheme—contributions up to 1995 under DB, contributions after 1995 under NDC.
- Timing and coverage:
  - Average contribution period for new pensions is about 33 years, expected to increase to 35 years.
  - Life expectancy at 65 is about 20 years.
  - By about 2030, all new retirees entering the pension system will be fully subject to the NDC formula; by about 2050, the old DB should be fully phased out from the stock of existing retirees.
- Eligibility and retirement age rules:
  - Statutory Retirement Age (SRA) gradually increasing to 67 years by 2019.
  - In 2017: SRA was 66 years and 7 months for men and for female employees in the public sector; 65 years and 7 months for female employees in the private sector; 66 years and 1 month for female self-employed. Private and self-employed female SRAs set to catch up by January 1, 2018.
  - Early retirement based on years of service: minimum years of service of 42 years and 10 months for men and 41 years and 10 months for women in 2017 (increasing to 43 years and 3 months for men and 42 years and 3 months for women in 2019).
  - Under NDC, workers may retire up to 3 years earlier than the SRA with minimum 20 years of contributions and a pension of at least €1,200 per month.
  - Indexation: from 2013 onwards, eligibility requirements linked to changes in life expectancy at 65 (every three years up to 2019 and every two years starting from 2021).
  - Note: periodic easing of “pathways to early retirement” has occurred; special treatments/incentives for early withdrawal should be avoided in both DB and NDC schemes.
- Minimum and social pensions:
  - Minimum contributory pension level in 2016: €6,524.57 annually.
  - Relative 60 percent poverty level in 2015: €9,508 for a single person.
  - Social pension in 2016: €5,824.91 annually (provided at an age of 65 years and 7 months, increasing with life expectancy).
  - Retirees above 70 years receive an additional monthly pension (or social purchase card), increasing the annual social pension to €8,298.29.
- Observations:
  - Despite past reforms, generous parts of the system remain where Italy is a clear outlier, indicating potential savings.
  - Pension projections rely on optimistic assumptions on employment (large unemployment falls) and sustained high real GDP growth rates for decades; relaxing these assumptions implies notable upward pressure on projected spending over coming decades until full effects of past reforms materialize.

### Box 3 — Mechanics of DB and NDC pension schemes (key quantitative points)
- DB system parameters:
  - Accrual rate (a); measure of earnings (w); valorization factor (u); retirement age (T).
- NDC system mechanics:
  - Contributions at rate (c) accumulate notional capital; accumulation depends on the IRR (ρ).
  - Annuity at retirement computed by dividing accumulated capital by annuity factor (G), function of life expectancy (LE) and IRR.
- IRR and steady-state equivalence:
  - In PAYG-financed NDC, natural choice for IRR is growth rate of the wage bill; when valorization in DB equals IRR in NDC (u = n) and a = c/G, DB and NDC can be identical in steady state.
- Short- to medium-run actuarial issues:
  - DB scheme uses a weighted average accrual rate of 2 percent (MEF, 2014); international comparison about 1.5–1.7 percent in the EU/euro area.
  - Reference wage periods before/after 1992 are short and inflate DB benefits; NDC covers total lifetime contributions.
  - Early retirement penalties under DB: 1 percent at age 61, 2 percent at age 60, and a further 2 p.p. for each year below 60; actuarially neutral reduction estimated around 7.5 percent per year.
  - Reducing the thirteenth pension payment would constitute a 7.7 percent cut in average pensions of the DB component.
- NDC design strengths and concerns:
  - NDC bases benefits on total lifetime earnings and automatically adjusts to shocks; not immune to parameter interference.
  - Italian NDC sets IRR as moving average of nominal GDP growth over the past five years.
  - Discount factor in Italy’s NDC scheme is fixed at 1.5 percent annually.
  - Absent comprehensive reforms, a real rate of return at 1.5 percent is considerably above Italy’s current growth potential.
- Survivor pensions and contribution facts:
  - Spending on survivor pensions around 2¾ percent of GDP, the highest in Europe.
  - Average monthly survivors benefit per inhabitant (constant prices) in 2014: €608 in Italy versus about €500 in the euro area.
  - Survivor pensions form about 28 percent of total pensions in Italy versus about 18 percent in the EU on average.
  - Pension contribution rates on wage earners are 33 percent (about one-third borne by the employee and two-thirds by the employer).
  - For self-employed and farmers, contribution rate in 2014 was 22.2 percent, set to increase to 24 percent by 2018.
  - “Neutral” contribution rate for the self-employed should be at least 27 percent.
  - OECD (2015) estimates gross and net replacement rates in Italy are on average about 17 percentage points higher than for the OECD average retiree.

### RGA long-run projections and IMF sensitivity analysis
- RGA (2017) projections:
  - Pension spending ratio to GDP: increase from 15.7 percent in 2015 to just above 16 percent in 2045; decline to 13.1 percent by 2070.
  - Adverse demographic trends add about 11½ percent of GDP to pension spending by 2050.
  - Employment and eligibility reforms drive savings of about 2½ and 6 percent of GDP reduction in pension spending over the long-run, respectively.
  - Unemployment rate assumed to reach as low as 5.5 percent by 2050 and remain steady afterwards.
- IMF staff simulations (more prudent assumptions):
  - Projection: pension spending reaches 20.3 percent of GDP in 2045 (about 4 percent of GDP above RGA baseline for 2045) and declines to 15.7 percent in 2070 (about 2½ percent of GDP higher than RGA baseline for 2070).
- Sensitivity results (selected):
  - Employment rate: if unemployment settles at 9 percent (implying long-term employment rate ≈ 60 percent), total pension spending increases by 1½ percent of GDP by 2070.
  - Productivity shocks:
    - 0.25 percentage points lower labor productivity growth → about 0.5 percent of GDP higher pension spending in both 2040 and 2060 (RGA 2016).
    - 0.2 percentage points lower TFP → pension spending to GDP ratio increases by 0.6–0.7 percent of GDP in 2040 and 2060.
    - IMF: permanent negative labor productivity shock of about ½ percentage points per year → pension spending about 1 percent of GDP higher in both 2040 and 2060.
    - Temporary negative labor productivity shock of same size (2016–25) → 0.4 percent of GDP higher pension spending between 2025–40 before fading.
  - Demographics: UN 2017 population projections → long-run pension spending increases by about 1 percent of GDP at peak relative to national projections.
  - EC-EPC (AWG) 2018 assumptions → pension spending increases about 2 percent of GDP at peak relative to the national scenario.

### Reform options and policy recommendations (pensions and protection)
- Near- and medium-term measures:
  - Eliminate the fourteenth pension payment fully and the thirteenth payment with an equivalent reduction in annual benefits for all retirees in the DB and mixed schemes; protect the vulnerable via a modern, well-targeted social safety net (e.g., a national and universal anti-poverty scheme).
  - Introduce an age limit for a surviving spouse and limit payments to relatives other than surviving spouse or orphan.
  - Recalibrate existing pensions based on the steady-state NDC formula or equivalent parameters for accrual rates and/or pensionable earnings to reduce short- to medium-run pension spending for beneficiaries of the generous DB scheme.
  - Harmonize effective contribution rates of self-employed with those of wage earners.
  - Consider lowering employers’ pension contributions as part of a fiscal devaluation strategy to reduce the labor tax wedge and lower long-run replacement rates; note trade-offs if NDC maintains a tight actuarial link.
  - Subject pension benefits to health contributions and realign the tax-free threshold with wage earners.
  - Adjust the NDC discount factor to reflect realistic growth potential and introduce automatic adjustment mechanisms linking pension spending to long-term actuarial balance.
- Broader imperative:
  - Comprehensive growth-enhancing reforms needed to reduce nominal wage rigidities, increase productivity, and raise long-run employment rates; without such reforms, even self-adjusting NDC may not ensure sustainability.

### Revenue, tax structure, and fiscal devaluation recommendations
- Key tax and revenue metrics:
  - Total government revenues: 43.5 percent of GDP versus EU average 37 percent.
  - Total tax revenues: 29.7 percent of GDP in 2015.
  - Labor tax wedge for a single person earning an average income: 47.9 percent.
  - VAT standard rate: 22 percent; EU average standard VAT rate about 21.5 percent.
  - VAT C-efficiency at about 40 percent.
  - VAT compliance gap estimated at about 26 percent (as of 2015).
  - VAT compliance gap (2015): €35.1 billion, about 26 percent of total VAT liability (2.1 percent of GDP).
  - Halving VAT compliance gap would increase revenues by 1.05 percent of GDP.
  - Tax expenditures estimated at 6.5 percent of GDP (Tyson, 2014) and 5.5 percent of GDP (Commissione Marè).
  - Revenues forgone per year over 2012-2014 estimated around €110 billion.
  - Stock of unpaid tax and SSC debt in 2016 was €614 billion; about €31 billion deemed recoverable.
- Fiscal devaluation and revenue rebalancing package (modeled assumptions):
  - Revenue switches:
    - Lower labor tax wedge: 1.5 percent of GDP.
    - Higher VAT collections: 1 percent of GDP.
    - Introducing a modern property tax: 0.5 percent of GDP.
  - Expenditure-side measures:
    - Lower public consumption by 1.25 percent of GDP.
    - Increase public investment by 0.5 percent of GDP.
    - Remaining 1.25 percent of GDP via reduced social transfers.
  - Modeled macro outcomes (GIMF):
    - Output increase around 2 percent and a lower debt-to-GDP ratio of around 13 percentage points in a decade relative to baseline.
    - Long-run outcomes: around 2½ percent higher output than baseline and more than 35 percentage points lower debt-to-GDP ratio than baseline.
- Tax instrument reform recommendations:
  - Replace dependent-spouse tax credit with in-work tax credit designed to increase with number of children.
  - Introduce a modern property tax on primary residences and update cadastral values.
  - Harmonize reduced VAT rates, reduce range of reduced rates/exemptions, and consider moderate increase in standard VAT rate.
  - Abolish inefficient tax expenditures (example: mortgage interest tax credit) and phase out frequent temporary measures.
  - Strengthen tax administration, restore autonomy to fiscal agencies, strengthen enforcement, align instalment arrangements with best practice, and implement effective write-off arrangements.
- Investment support instruments:
  - ACE: ACE rate reduced from 4.5 percent to 2.3 percent in 2017 and 2.7 percent in 2018; recommendations include higher ACE for start-ups, re-linking ACE rate to government bond yields with a premium, and introducing a minimum rate of 2 to 3 percent.
  - R&D and IP box: Italy exempts 50 percent of qualified IP income (implying effective tax rate about 12 percent); empirical evidence suggests R&D tax incentives better target R&D than IP boxes; options include abolishing the IP box, making R&D tax credit permanent, and credibly not renewing temporary super depreciation rules.

### Concluding policy priorities and synthesis
- Paper objectives:
  - Assess spending patterns to identify savings.
  - Evaluate the pension system.
  - Analyze scope for revenue rebalancing.
  - Outline a package of spending cuts and tax rebalancing that is growth friendly and inclusive.
- Summary messages:
  - Despite past reforms, generous parts of the pension system remain and pension projections are sensitive to optimistic employment and growth assumptions.
  - A revenue-neutral, less distortionary tax reform combined with spending reallocation toward capital spending can generate sizable output gains and sustainably lower public debt over the medium to long term.
  - Short-term output costs are limited if reforms are credible.

*Source: wp1859 - 1. Poverty Reduction Measures (IMF).*

### 1. Poverty Reduction Measures  ________________________________________________5

### 1. Poverty Reduction Measures

### Fiscal context and targets
- Headline deficit projected to decline from 2.1 percent of GDP in 2017 to 1.6 percent of GDP in 2018, 0.9 percent of GDP in 2019, and 0.2 percent of GDP in 2020.  
- Structural deficit (deficit adjusting for the economic cycle) projected to decline from about 1.3 percent of GDP in 2017 to 1 percent of GDP in 2018, 0.6 percent of GDP in 2019 and 0.2 percent of GDP in 2020.  
- Concrete measures to reach these targets were not specified beyond broad areas: cuts following spending reviews, the fight against tax evasion, and rationalizing tax expenditures.  

### Social benefits, poverty programs, and recent reforms
- Social benefits dominate primary spending, constituting half of total primary spending (up from 40 percent at euro accession).  
- Pension spending is the bulk of social benefits; pension spending is around 16 percent of GDP and is the second highest in the euro area after Greece.  
- Social benefits increased by about 43 percent cumulatively from 1999 to 2007 and by a further 33 percent since then.  
- Non-pension social benefit spending in Italy is described as low, fragmented, and poorly targeted relative to other EU countries; there is disproportionately low share of social transfers accruing to the low-income working-age population.  
- Poverty-reduction program evolution:
  - Minimum Insertion Income introduced in 1999 (experimental).  
  - Social card introduced in 2008 (emergency measure), re-designed and broadened in 2011.  
  - SAI (Support for Active Inclusion) program launched in 2013, targeting low-income families with children/disabilities in a limited number of municipalities; extended nationwide in 2016 and eligibility relaxed in 2017.  
  - Fund for Combating Poverty and Social Exclusion set up with 2016 Stability Law to introduce a national minimum-income program by 2018.  
  - REI (Inclusion Income, Reddito di inserimento) introduced within an enabling law in 2017, replacing SIA and other pre-existing measures as of January 2018:
    - Expected increase in households covered from 160,000 households under SIA to 660,000 households under REI.  
    - Eligibility: households with children under 18 years old, pregnant women, and unemployed people above 65 years of age experiencing economic hardship (an equivalent financial situation index of €6,000 or less, per a top-up formula), and based on comprehensive evaluation of need considering both income and wealth.  
    - Benefits conditional on a personalized work/social inclusion plan prepared by local administrations, with applicant participation required.  
    - REI annual funding, once fully operational, of about €1.8 billion.  
- Policy recommendation summary: reduce fragmentation of anti-poverty programs and improve targeting; organize welfare services and improve coordination among social services.

### Spending composition, efficiency issues, and policy implications
- Long-run spending patterns:
  - From 1999 to 2007, nominal current primary expenditure grew faster than the euro area average and well above Italy’s average nominal potential growth—driven mainly by social benefits (primarily pensions), intermediate consumption, and wages.  
  - From 2008 to 2016, nominal current primary expenditure grew at 1.8 percent per year on average, below the euro area average of 2.6 percent.  
  - Public sector employees declined from 3.6 million in 2007 to around 3.3 million in 2015.  
  - Capital expenditure declined by about 28 percent in nominal terms between 2009 and 2016.  
  - Total public expenditure higher than euro area average by about 2 percent of GDP (50.4 percent of GDP versus 48.5 percent), largely reflecting the high cost of servicing public debt.  
  - Interest on debt was 4.2 percent of GDP in 2015; education spending was 4 percent of GDP; defense 1.2 percent of GDP.  
- Identified overspending and efficiency opportunities:
  - Largest overspending relative to the euro area average: social benefits (social protection).  
  - Interest payments exceed the euro area average by 1.6 percent of GDP.  
  - Other overspending: intermediate consumption in health, compensation of employees in defense/public order and safety/health, subsidies in economic affairs, and capital transfers in general services and economic affairs.  
  - Public health spending is in line with the euro area average in aggregate, but composition is skewed toward compensation of employees and intermediate consumption—suggesting efficiency gains at the local-government level.  
  - Underspending relative to euro area average: education (goods and services and total compensation), especially at tertiary level; gross capital formation.  
- Policy recommendations:
  - Rationalize total social benefit spending, especially pensions.  
  - Improve targeting of non-pension social benefit spending to those most in need.  
  - Improve efficiency of health spending at local level and reallocate spending toward capital spending and education.  
  - Complementary measures to protect the vulnerable include more intense use of active labor market policies and a modern social safety net.  
  - Continued implementation of spending reviews and stronger centralization/digitization efforts to achieve efficiency (referenced past spending reviews with potential savings up to 0.4 percent of GDP in 2014, 1 percent of GDP in 2015, and 2 percent of GDP in 2016 under proposed actions).

### Pension system: structure, reforms, and quantitative markers
- Historical reforms since 1992 include: pro-rata replacement of DB with NDC (1995), periodic mortality-based updates (2007), tightening of eligibility requirements (1992, 1995, 1997, 2004, 2007, 2011), alignment of statutory retirement age for women with men (2010, 2011), and indexation of retirement age to life expectancy.  
- Transition rules based on years of insurance accumulated by end-1995:
  - Insured with at least 18 years of contributions by end-1995 will largely maintain the DB formula for contributions until 2011; contributions after 2011 subject to NDC.  
  - Insured with less than 18 years of contributions by end-1995 are subject to a pro-rated scheme: contributions up to 1995 under DB formula, contributions after 1995 under NDC.  
- Timing and coverage:
  - Average contribution period for new pensions is about 33 years, expected to increase to 35 years.  
  - Life expectancy at 65 is about 20 years.  
  - By about 2030, all new retirees entering the pension system will be fully subject to the NDC formula; by about 2050, the old DB should be fully phased out from the stock of existing retirees.  
- Eligibility and retirement age rules:
  - Statutory Retirement Age (SRA) gradually increasing to 67 years by 2019. In 2017: SRA was 66 years and 7 months for men and for female employees in the public sector; 65 years and 7 months for female employees in the private sector; 66 years and 1 month for female self-employed. Private and self-employed female SRAs are set to catch up by January 1, 2018.  
  - Early retirement based on years of service: minimum years of service of 42 years and 10 months for men and 41 years and 10 months for women in 2017 (increasing to 43 years and 3 months for men and 42 years and 3 months for women in 2019).  
  - Under NDC, workers may retire up to 3 years earlier than the SRA with minimum 20 years of contributions and a pension of at least €1,200 per month.  
  - Indexation: from 2013 onwards, eligibility requirements are linked to changes in life expectancy at 65 (every three years up to 2019 and every two years starting from 2021).  
  - Note: periodic easing of “pathways to early retirement” has occurred; special treatments/incentives for early withdrawal should be avoided in both DB and NDC schemes.  
- Minimum and social pensions:
  - Minimum contributory pension level in 2016: €6,524.57 annually.  
  - Relative 60 percent poverty level in 2015: €9,508 for a single person.  
  - Social pension in 2016: €5,824.91 annually (provided at an age of 65 years and 7 months, increasing with life expectancy).  
  - Retirees above 70 years of age receive an additional monthly pension (or social purchase card), increasing the annual social pension to €8,298.29.  
- Observations and implications:
  - Despite past reforms, there remain generous parts of the system where Italy is a clear outlier, indicating potential savings.  
  - Pension projections rely on optimistic assumptions on employment (large unemployment falls) and sustained high real GDP growth rates for decades; relaxing these assumptions implies notable upward pressure on projected spending over coming decades until full effects of past reforms materialize.  

*Source: wp1859 - 1. Poverty Reduction Measures (IMF).*

### Box 3. A Quantitative Primer on the Mechanics of DB and NDC Pension Schemes

### Box 3. A Quantitative Primer on the Mechanics of DB and NDC Pension Schemes

### Defining mechanics and key parameters
- DB system key parameters:
  - accrual rate (a): pension entitlement for a full year’s coverage as a share of earnings.
  - measure of earnings (w): usually lifetime average earnings.
  - valorization factor (u): how earnings of earlier years are adjusted to reflect changes in standards of living between the year of retirement and these earlier years.
  - retirement age (T).
- NDC system notional contributions and annuity:
  - contributions at rate (c) accumulate notional capital; accumulation depends on the notional interest rate / internal rate of return (IRR, ρ).
  - annuity at retirement computed by dividing accumulated capital by annuity factor (G), which is a function of life expectancy (LE) at retirement and the IRR.
- Internal rate of return (IRR) in pure NDC:
  - IRR is chosen to equalize the system’s financial balance where the present value of overall system assets (A) equals the present value of total system liabilities (L).
  - In a PAYG-financed NDC the natural choice for the notional IRR is the implicit return of the PAYG scheme, i.e., the growth rate of the wage bill; n is the growth rate of labor force (population) and g is the productivity growth.
- Steady-state equivalence:
  - When valorization in DB equals IRR in NDC (i.e., u = n) and accrual rate (a) equals contribution rate divided by annuity factor (c/G), DB and NDC can be identical in steady state.
- Rules versus discretion:
  - NDC benefits adjust automatically to shocks (e.g., sudden decline in fertility or increase in life expectancy via G).
  - DB can be adjusted similarly, but many DB parameters are absent or non-discretionary; reversing accounting changes which parameters policymakers can more easily control (e.g., IRR computation rules, minimum retirement age, life expectancy tables, methods to calculate annuity).

### Short- to medium-run issues and actuarial fairness
- General assessment:
  - The short- to medium-run pension system provides very high benefits compared to actuarially fair values; the existing DB scheme is overly generous on many accounts.
- Specific issues identified:
  - Accrual rates:
    - The DB scheme uses a weighted average accrual rate of 2 percent (MEF, 2014).
    - International comparison: about 1.5–1.7 percent in the EU/euro area.
  - Reference wage / pensionable earnings:
    - For insurance years before 1992: reference wage = last monthly wage for civil servants or average wage of last 5 to 10 years in private sector (varies by source and occupation).
    - For contribution years after 1992: number of annual wages in calculation increases gradually until it covers last 10 years for employees and last 15 years for self-employed.
    - These periods are still too short and tend to inflate DB scheme benefits; by contrast, the NDC covers total lifetime contributions.
  - Early retirement penalties (actuarial corrections):
    - Under DB: penalty is 1 percent at age 61, 2 percent at age 60, and a further 2 p.p. for each year below 60.
    - These penalties are lenient; for Italy Queisser and Whitehouse (2006) calculate actuarially neutral reduction for each year of early retirement is in the order of 7.5 percent.
- Replacement rates and intergenerational fairness:
  - DB/mixed schemes provide high replacement rates that do not seem actuarially fair and place the adjustment burden disproportionately on future retirees.
  - Difference from the euro area average is around 10 percentage points (EC, 2015).
  - A simplest fiscal saving option: reduce spending in DB/mixed schemes equivalent to the thirteenth pension payment (the Christmas bonus), which would constitute a 7.7 percent cut in average pensions of the DB component.
  - Note: in a wholly NDC scheme the thirteenth payment by itself does not constitute a departure from actuarial fairness since the calculation of the annuity considers 13 payments.
  - Another option to improve intergenerational fairness: recalibrate existing pensions based on the steady-state NDC formula or equivalent accrual rates.

### NDC design strengths and outstanding concerns
- NDC advantages:
  - Based on total lifetime earnings history instead of average of the last few years.
  - Automatically cuts benefits (implicit accrual rates) in case of lower contribution rates/payments or demographic shocks.
  - Ensures neutral adjustment factors (implicit early retirement penalties).
  - Not automatically immune to interference—parameters (e.g., fourteenth pension, annuity factor) can alter outcomes.
  - Sustainability depends on demographic trends and whether growth and employment outcomes materialize as parameterized.
- Concern about IRR calibration:
  - Under current policies the annuity factor is based on a too high internal rate of return.
  - In a “pure” NDC, IRR should be chosen to ensure actuarial balance between system-wide assets and liabilities; in steady state IRR converges to the rate of economic growth.
  - In the Italian NDC the IRR that credits the notional capital each period is the moving average of nominal GDP growth over the past five years.
  - The discount rate used to derive the annuity factor, defined as the ratio of the IRR to a rate of inflation indexing, is set at a rate of

*Source: Box 3, "A Quantitative Primer on the Mechanics of DB and NDC Pension Schemes", wp1859.*

### 1.5 percent, based on an expected long-run real growth rate.

### wp1859 - 1.5 percent, based on an expected long-run real growth rate.

### Key findings on pension system design and outcomes
- The discount factor in Italy’s NDC scheme is fixed at 1.5 percent annually.
- Absent comprehensive and decisive structural reforms, a real rate of return at this level is considerably above Italy’s current growth potential.
- The NDC system credits notional capital based on past performance; adjustments to macro-demographic conditions (e.g., revisions in the transformation coefficient) typically affect future generations only, leaving current retirees unaffected.
- Survivor pensions:
  - Spending on survivor pensions is around 2¾ percent of GDP, the highest in Europe.
  - Average monthly survivors benefit per inhabitant (constant prices) in 2014: €608 in Italy versus about €500 in the euro area.
  - Survivor pensions form about 28 percent of total pensions in Italy versus about 18 percent in the EU on average.
  - Eligibility for a surviving spouse in Italy does not appear to be constrained by an age limit.
  - Payments to family members other than surviving spouse or orphans occur and should be strictly limited.
- Contribution rates and tax treatment:
  - Pension contribution rates on wage earners are 33 percent; about one-third borne by the employee and two-thirds by the employer.
  - For self-employed and farmers, the contribution rate in 2014 was 22.2 percent, set to increase to 24 percent by 2018.
  - The “neutral” contribution rate for the self-employed should be at least 27 percent.
  - OECD (2015) estimates: gross and net replacement rates in Italy are on average about 17 percentage points higher than for the OECD average retiree.
  - Retirees benefit from a higher tax-free allowance and full exemption on health contributions on pensions; Italy also offers tax relief on pension income from private schemes.

### RGA long-run projections (RGA (2017))
- Pension spending as a ratio of GDP is projected to:
  - Increase from 15.7 percent in 2015 to just above 16 percent in 2045.
  - Decline afterwards, reaching 13.1 percent by 2070.
- Main drivers and offsets noted by the RGA:
  - Adverse demographic trends (rising old-age dependency) add about 11½ percent of GDP to pension spending by 2050.
  - Benefit rate increases over the next decade (until 2025) owing to the generosity of the old DB component relative to low productivity growth.
  - Over time, the share of retirees under the NDC scheme is projected to dominate, putting the benefit rate on a modest downward trend.
  - Employment and eligibility reforms (increased employment rate, reduced unemployment, restricted early retirement, extended retirement ages) drive the strongest savings: about 2½ and 6 percent of GDP reduction in pension spending over the long-run, respectively.
  - Unemployment rate assumed to reach as low as 5.5 percent by 2050 and remain steady afterwards in RGA baseline.

### Alternative scenarios and sensitivity (IMF staff simulations)
- More prudent assumptions (closer to historical record) yield notably higher pension spending:
  - Projection: pension spending reaches 20.3 percent of GDP in 2045 (about 4 percent of GDP above RGA baseline for 2045) and declines to 15.7 percent in 2070 (about 2½ percent of GDP higher than RGA baseline for 2070).
- Specific sensitivity results:
  - Employment rate:
    - RGA projects employment (15–64) from 56 percent in 2015 to 66½ percent in 2070 with unemployment falling to about 5.5 percent.
    - If unemployment instead settles at 9 percent (implying long-term employment rate ≈ 60 percent), total pension spending increases by 1½ percent of GDP by 2070.
  - Total factor productivity (TFP):
    - RGA assumes per capita real GDP and real labor productivity growth around 1¾ percent annually.
    - RGA (2016) calculations: 0.25 percentage points lower labor productivity growth → about 0.5 percent of GDP higher pension spending in both 2040 and 2060.
    - 0.2 percentage points lower TFP → pension spending to GDP ratio increases by 0.6–0.7 percent of GDP in 2040 and 2060.
    - IMF staff simulation: a permanent negative labor productivity shock of about ½ percentage points per year → pension spending about 1 percent of GDP higher in both 2040 and 2060.
    - A temporary negative labor productivity shock of the same size (2016–25) → 0.4 percent of GDP higher pension spending between 2025–40 before fading.
  - Demographics:
    - Using UN 2017 population projections → long-run pension spending increases by about 1 percent of GDP at peak relative to national projections.
  - EC-EPC (AWG) 2018 assumptions (steady-state unemployment ≈ 7½ percent; faster achievement of 1 percent TFP by 2035) → pension spending increases about 2 percent of GDP at peak relative to the national scenario.

### Reform options and policy recommendations
- Near-term and medium-term measures to yield savings and improve actuarial fairness:
  - Eliminate the fourteenth pension payment fully and the thirteenth payment with an equivalent reduction in annual benefits for all retirees in the DB and mixed schemes; protect the vulnerable via a modern, well-targeted social safety net (e.g., a national and universal anti-poverty scheme).
  - Introduce an age limit for a surviving spouse and limit payments to relatives other than surviving spouse or orphan.
  - Recalibrate existing pensions based on the steady-state NDC formula or equivalent parameters for accrual rates and/or pensionable earnings to reduce short- to medium-run pension spending for beneficiaries of the generous DB scheme.
  - Harmonize effective contribution rates of self-employed with those of wage earners to address preferential treatment and improve financing and fairness.
  - Consider lowering employers’ pension contributions as part of a fiscal devaluation strategy to reduce the labor tax wedge and lower long-run replacement rates; note trade-offs as this is not first-best if NDC maintains a tight actuarial link between contributions and benefits.
  - Subject pension benefits to health contributions and realign the tax-free threshold with wage earners; retirees should pay health contributions given higher consumption of health services.
  - Adjust the NDC discount factor to reflect realistic growth potential and introduce an automatic adjustment mechanism linking pension spending to the long-term actuarial balance (examples cited: Sweden, Canada, Germany). The current discount factor fixed at 1.5 percent annually is well above Italy’s long-term growth potential under current policy settings.
- Broader policy imperative:
  - Italy needs comprehensive growth-enhancing reforms to reduce nominal wage rigidities, increase productivity, and raise long-run employment rates. Without such reforms, even the self-adjusting NDC cannot ensure sustainability of the pension system and public debt.
  - Prudence: set safeguards and system-wide parameters in line with the economy’s potential under current policies rather than the stronger growth rates assumed in RGA (2017) projections to reduce the risk of large, sudden adjustments.

### Revenue and tax observations related to pensions and labor
- Italy’s tax profile:
  - Flat tax rate of 26 percent on capital income (dividends, interest income, and capital gains on securities).
  - 21 percent on rental income.
  - Labor income: progressive IRPEF with starting rate 23 percent and top rate 43 percent for income exceeding €75,000.
  - Corporate income tax (IRES) rate: 24 percent; surcharge of 3.5 percent on financial and insurance companies.
  - IRAP (regional production tax) fixed rate: 3.9 percent on the net value of production.
- Revenue levels:
  - Total government revenues: 43.5 percent of GDP versus EU average 37 percent.
  - Total tax revenues: 29.7 percent of GDP in 2015.
- Labor tax wedge:
  - Average tax wedge in Italy for a single person earning an average income is 47.9 percent.

*Source: wp1859 - 1.5 percent, based on an expected long-run real growth rate.*

### 35.9 percent.

### wp1859 - 35.9 percent.

### Key finding
- 35.9 percent.

### Observed pattern
- "This pattern is observed across levels of income and types of households."

### Social security contributions (SSC)
- "The ratio of the social security contributions (SSC) to GDP is"

*Source: wp1859 - 35.9 percent.*

### 13.4 percent, which is 2 percentage points

### wp1859 - 13.4 percent, which is 2 percentage points

### Tax structure and revenue performance
- Total tax and revenue indicators:
  - The share of personal income tax (PIT) in total taxes is 41 percent.
  - The CIT to GDP ratio is about 2 percent, compared to the EU average of 2.7 percent.
  - The current EU simple CIT average (excluding Italy) is 21.3 percent.
  - The standard VAT rate is 22 percent; EU average standard VAT rate is about 21.5 percent.
  - VAT C-efficiency at about 40 percent, well below the EU average.
  - VAT compliance gap estimated at about 26 percent (as of 2015), fifth highest in EU.
  - Combined implication: policy gap of about 54 percent (the second highest in EU).
  - CIT revenue productivity is 7.4 percent compared to the EU average of 13.4 percent.
  - Implicit Tax Rate on Corporate Income in Italy was 25.9 percent in 2012 (latest available), compared to 17.8 percent for Spain and 20.8 percent for the U.K.
- Tax expenditures and narrow bases:
  - Tax expenditures estimated at 6.5 percent of GDP (Tyson, 2014) and 5.5 percent of GDP (Commissione Marè).
  - MEF identifies 600 measures of tax expenditures on a legal basis.
- Tax evasion and arrears:
  - Revenues forgone per year over 2012-2014 estimated around €110 billion.
  - Stock of unpaid tax and SSC debt in 2016 was €614 billion.
  - Of tax arrears, about €31 billion is deemed recoverable.
  - Toro and others (2015) estimate 31 percent of debtors are out of business or bankrupt and 36 percent relate to cases where enforcement actions did not result in actual collection.

### Key features of Italian tax instruments and rates
- Personal and capital income taxation:
  - DIT regime essence: tax capital at a low single rate and labor income under a progressive schedule.
  - 26 percent flat rate applies for non-qualified shareholding.
  - If thresholds met, 49.72 percent of qualified shareholding capital gains or dividends are subject to the progressive PIT scale.
  - Reduced rate of 12.5 percent on capital income deriving from State securities.
  - Tobin tax on financial transactions and stamp duties apply to stocks of financial assets rather than incomes.
- IRAP and interaction with IRES:
  - Ten percent of the IRAP paid during a year can be deducted from the IRES.
  - Labor cost for open-ended employees can be deducted from the IRAP tax base.
  - Regions can reduce up to zero the IRAP tax rate of 3.9 percent or increase it by up to 0.9 pp.
- Social security contributions and tax wedge:
  - Tax wedge defined as sum of taxes and SSCs paid by employees and SSCs paid by employers, minus family received benefits.
  - Measures to reduce labor tax wedge include SSC exemptions, the €80 PIT reduction, and deduction from the IRAP tax base for labor cost of permanent hires.

### Fiscal devaluation and recommended revenue rebalancing
- Growth-friendly rebalancing objective: shift tax burden from labor to property and consumption while supporting investment.
- Fiscal devaluation elements (revenue-neutral shift):
  - Lower employers’ SSC rate to closer to the EU average.
  - Replace family (“dependent spouse”) tax credit with an in-work tax credit; design to increase with number of children.
    - Colonna and Marcassa (2015) find replacing dependent-spouse tax credit with in-work tax credit increases married women participation rate by 3 percentage points.
  - Introduce a modern property tax on primary residences and update cadastral values.
  - Lower VAT policy and compliance gaps by harmonizing reduced VAT rates, reducing range of reduced rates/exemptions, and considering a moderate increase in the standard VAT rate.
  - Eliminate inefficient tax expenditures (example: abolish the mortgage interest tax credit).
  - Make the newly introduced self-employment regime compulsory.
  - Strengthen capital gains taxation by ensuring Italy’s right in domestic law to tax capital gains from offshore indirect transfers of assets.
- Specific revenue switches modeled in fiscal package:
  - Lower labor tax wedge: 1.5 percent of GDP.
  - Higher VAT collections: 1 percent of GDP.
  - Introducing a modern property tax: 0.5 percent of GDP.
- Notes on property tax:
  - Recurrent taxes on immovable property raised 1.6 percent of GDP in Italy in 2015.
  - Re-introduction of property tax on primary residences considered vital; IMU on luxury houses remains enacted but reduced.

### Targeted tax expenditure reforms and recommendations
- Tax expenditures to revisit or phase out:
  - Mortgage interest tax credit:
    - Tax credit equals 19 percent of mortgage interest payments, upper limit €4,000.
    - Recommendation: phase out or lower generosity.
  - Tax credit for medical expenses:
    - Tax credit equals 19 percent of medical expenses exceeding €129.11.
    - 2015 analysis: beneficiaries mostly with incomes below €55,000; 17.3 million beneficiaries for a total amount of €16.2 billion of expenses.
    - Recommendation: revisit and consider better-targeted government expenditure alternatives.
- Broader suggestions:
  - Abolish inefficient tax expenditures and frequent temporary measures that generate uncertainty.
  - Ensure permanency and credibility for R&D tax credit; consider making it permanent.
  - Consider abolishing the IP box regime.
  - Credibly announce non-extension of enhanced depreciation (temporary super depreciation rules).

### Supporting investment: ACE, R&D, and IP box
- Allowance for Corporate Equity (ACE):
  - ACE introduced since 2012; ACE rate was reduced from 4.5 percent to 2.3 percent in 2017 and 2.7 percent in 2018.
  - ACE contributes to very low or negative marginal effective tax rates (METR); METR in Italy can be zero or negative because ACE does not tax normal return.
  - Recommendations to improve ACE design:
    - Provide a higher ACE rate for start-ups.
    - Re-link the ACE rate to government bond yields and add a premium for risks.
    - Introduce a minimum rate of 2 to 3 percent in line with the EU CCCTB proposal.
- R&D incentives and IP box:
  - Empirical evidence: one euro spent on R&D tax incentives increases domestic private R&D by one euro on average; one euro spent on an IP box can, at best, increase R&D by less than one euro.
  - Italy exempts 50 percent of qualified IP income from taxation and taxes the remaining 50 percent at the statutory CIT rate of 24 percent, implying an effective tax rate of about 12 percent.
  - Conceptual concerns with IP boxes: rewards only success; not connected to R&D expenditure; imperfect targeting of R&D location.
  - Options to streamline:
    - Abolish the IP box regime.
    - Make the R&D tax credit permanent.
    - Credibly announce that temporary super depreciation rules will not be renewed.
    - Periodically assess effectiveness of allowances for investment in innovative startups.

### Tax administration, compliance, and arrears management
- High level of tax arrears and compliance gaps:
  - VAT compliance gap (2015): €35.1 billion, about 26 percent of total VAT liability (2.1 percent of GDP).
  - Halving the VAT compliance gap, holding rates unchanged, would increase revenues by 1.05 percent of GDP.
  - Fully closing the VAT policy gap (no reduced rates/exemptions) would enable Italy to increase VAT revenue by an additional 15 percent (full compliance scenario).
- Actions recommended:
  - Restore autonomy to fiscal agencies.
  - Strengthen enforcement and relax legal constraints to tackle tax debt.
  - Bring instalment arrangements in line with international best practice.
  - Implement effective write-off arrangements, since a significant amount of arrears is likely not collectible.
  - Support enforcement with timely filing, modern payment arrangements, and relaxing legal constraints.

### Modeled fiscal reform scenario and macro outcomes (GIMF results)
- Assumptions of modeled scenario:
  - Permanent fiscal consolidation of about 2 percent of GDP (in the structural primary balance) over four years to achieve a small structural surplus.
  - Revenue-side measures: lower labor tax wedge (1.5 percent of GDP), higher VAT collections (1 percent of GDP), modern property tax (0.5 percent of GDP).
  - Expenditure-side measures: lower public consumption by 1.25 percent of GDP, increase public investment by 0.5 percent of GDP, remaining 1.25 percent of GDP via reduced social transfers.
  - Model assumes higher public investment raises private sector productivity.
- Simulated outcomes:
  - Output increase of around 2 percent and a lower debt-to-GDP ratio of around 13 percentage points in a decade relative to the baseline.
  - Long-run outcomes: around 2½ percent higher output than baseline and more than 35 percentage points lower debt-to-GDP ratio than baseline.
  - Revenue-neutral tax reform on its own yields higher private consumption and output by shifting toward less distortionary taxation.
  - Short-term costs modest; if households and firms fully believe the full reform path, short-term costs are even smaller and long-term benefits realized sooner.

### Conclusions and policy priorities
- Paper objectives restated:
  - Assess spending patterns to identify savings.
  - Evaluate the pension system.
  - Analyze scope for revenue rebalancing.
  - Outline a package of spending cuts and tax rebalancing that is growth friendly and inclusive.
- Pension system observations:
  - Despite past reforms, generous parts remain where Italy is an outlier, signaling potential savings.
  - Pension projections rely on optimistic assumptions for employment and long-run real GDP growth; relaxing these assumptions implies notable rise in projected spending and higher debt levels.
- Overall policy message:
  - A revenue-neutral, less distortionary tax reform combined with spending reallocation toward capital spending can generate sizable output gains and sustainably lower public debt over the medium to long term.
  - Short-term output costs are limited if reforms are credible.

*Source: IMF staff calculations and analysis in wp1859 - 13.4 percent, which is 2 percentage points*

### REFERENCES

### REFERENCES

### Macroeconomic Models and Fiscal Policy
- Anderson, D., B. Hunt, M. Kortelainen, M. Kumhof, D. Laxton, D. Muir, S. Mursula, and S. Snudden, 2013, “Getting to Know GIMF: The Simulation Properties of the Global Integrated Monetary and Fiscal Model,” IMF Working Paper WP/13/55, February 2013 (Washington: International Monetary Fund).
- Kumhof, M., D. Laxton, D. Muir and S. Mursula, 2010, “The Global Integrated Monetary Fiscal Model (GIMF) —Theoretical Structure,” IMF Working Paper Series, WP/10/34 (Washington: International Monetary Fund). http://www.imf.org/external/pubs/cat/longres.cfm?sk=23615.0
- International Monetary Fund, 2016a, “Tax Policy, Leverage and Macroeconomic Stability,” IMF Policy Paper, October (Washington).
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- International Monetary Fund, 2010, “Italy’s Fiscal Sustainability Revisited,” in IMF Country Report No. 10/157 (Washington).

### Taxation, Public Finance, and VAT
- De Mooij, R., 2008, “Reinventing the Dutch Tax-Benefit System: Exploring the Frontier of the Equity-Efficiency Trade-off,” International Tax and Public Finance, Vol. 15, pp. 87–103.
- De Mooij and Keen (2012): “Fiscal Devaluation” and Fiscal Consolidation: The VAT in Troubled Times,” IMF WP/12/85 (Washington: International Monetary Fund).
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- European Commission, 2016, “Taxation Trends in the European Union” (Brussels).
- Dumont, M., 2015, “Evaluation of Federal Tax Incentives for Private R&D in Belgium: An Update,” Belgian Federal Planning Bureau Working Paper 5–15.
- Bloom, N., Griffith, R., and Van Reenen, J., 2002, “Do R&D Tax Credits Work? Evidence from a Panel of Countries 1979–1997,” Journal of Public Economics, Vol. 85, pp. 1–31.
- Medeiros Joao and Christoph Schwierz, 2015, “Efficiency Estimates of Health Care Systems in the EU,” European Economy Economic Papers, Vol. 549, June.

### Pensions, Pension Reform, and Social Protection
- Börsch-Supan, Alex, 2006, “What are NDC Systems? What Do They Bring to Reform Strategies?” in Pension Reform: Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes ed. by Holzmann, R. and E. Palmer (Washington: World Bank).
- Palmer, Edward, 2006, “What Is NDC?” in Pension Reform: Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes, ed. by Holzmann, R. and E. Palmer (Washington: World Bank).
- Settergren, O. and D.B. Mikula, 2006, “The Rate of Return of Pay-As-You-Go Pension Systems: A More Exact Consumption-Loan Model of Interest,” in Pension Reform: Issues and Prospects for Non-Financial Defined Contribution (NDC) Schemes, ed. by Holzmann, R. and E. Palmer (Washington: World Bank).
- Barr, N. and P. Diamond, 2011, “Improving Sweden’s Automatic Pension Adjustment Mechanism,” Center for Retirement Research.
- Queisser, M. and E. Whitehouse, 2006, “Neutral or Fair? Actuarial Concepts and Pension-System Design,” OECD Social, Employment and Migration Working Papers, No. 40 (OECD Publishing: Paris).
- RGA, 2016, “Le tendenze di medio lungo periodo del sistema pensionistico e socio-sanitario,” Department of the State Accountant General, Ministry of Economy and Finance, Report No. 17 (July).
- RGA, 2017, “Le tendenze di medio lungo periodo del sistema pensionistico e socio-sanitario,” Department of the State Accountant General, Ministry of Economy and Finance, Report No. 18 (September).
- MEF, 2014, “2015-Round of EPC–WGA projections—Italy’s Fiche on Pensions.”
- MEF, 2017, “Ministry of Economy and Finance: Update of 2017 Economic and Financial Document”, 23 September.
- SSA, 2016, “Social Security Programs Throughout the World: Europe, 2016”, SSA Publication No. 13-11801.

### Labor, Female Labor Supply, and Policy Uncertainty
- Colonna, F., and Marcassa, S., 2015, “Taxation and Female Labor Supply in Italy,” IZA Journal of Labor Policy, December 4:5.
- Saez, E., Slemrod, J., and Giertz, S., 2002, “Optimal Income Transfer Programs: Intensive versus Extensive Labor Supply Responses,” Quarterly Journal of Economics, Vol. 117, pp. 1039–1073.
- Gulen, H., and Ion, M., 2016, “Policy Uncertainty and Corporate Investment,” Review of Financial Studies, Vol. 29, pp. 523–564.

### Health Systems and Efficiency
- Medeiros Joao and Christoph Schwierz, 2015, “Efficiency Estimates of Health Care Systems in the EU,” European Economy Economic Papers, Vol. 549, June.
- World Bank, 2013a, “Review of Key Design Parameters and Legislation for Social Assistance Programs in Latvia,” in Scientific Research: Latvia: Who Is Unemployed, Inactive or Needy? Assessing Post Crisis Policy Options (Washington).
- World Bank, 2013b, “Analysis of the Incentive Structure Created by the Tax and Benefit System,” in Scientific Research: Latvia: Who Is Unemployed, Inactive or Needy? Assessing Post Crisis Policy Options (Washington).

### Country Surveys, Reports, and Other Institutional Works
- Bank of Italy, 2012, “L’efficienza Della Spesa per Infrastrutture,” papers presented at a workshop held on 28 April 2011.
- EC, 2015, “The 2015 Ageing Report. Economic and Budgetary Projections for the 28 EU Member States (2013–2060),” European Economy, Vol. 3.
- OECD, 2015, “Economic Survey of Italy,” February (OECD Publishing: Paris).
- OECD, 2015, “Pensions at a Glance 2015: OECD and G20 indicators” (OECD Publishing: Paris).
- World Bank, 2013a, “Review of Key Design Parameters and Legislation for Social Assistance Programs in Latvia,” in Scientific Research: Latvia: Who Is Unemployed, Inactive or Needy? Assessing Post Crisis Policy Options (Washington).
- World Bank, 2013b, “Analysis of the Incentive Structure Created by the Tax and Benefit System,” in Scientific Research: Latvia: Who Is Unemployed, Inactive or Needy? Assessing Post Crisis Policy Options (Washington).

*Source: https://www.imf.org/-/media/files/publications/wp/2018/wp1859.pdf*

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_Source: https://www.imf.org/-/media/files/publications/wp/2018/wp1859.pdf_