Three Essays on Pension Systems and Fiscal Sustainability

The ability of countries to preserve the current fiscal policy without running into solvency problems and possible default has become a great concern for many industrialized countries, which experienced significant increases in their national debt levels during the aftermath of the economic and financial crisis. Sustainable public finances and lower public debt burdens are important elements to ensure that countries are strong enough to cope with adverse macroeconomic contexts and projected implicit liabilities related to aging, i.e. pension, health care, and long-term care expenditures. The aim of this thesis is to provide different perspectives on the study of pension systems and fiscal sustainability. In the first chapter, we estimate the impact of immigration on the sustainability of Italian public finances using the methodology of Generational Accounting, showing that the burden of current fiscal policy reduces as integration of the foreignborn increases. In the second chapter, we investigate how uncertainty regarding future mortality and life expectancy outcomes have affected the Italian public pension budget, revealing a consistent underestimation of actual life spans when forecasts are based on expectations. Finally, in the third chapter, we analyze in a general equilibrium framework labor market distortions and capital accumulation arising within different pension systems to highlight the importance of guaranteeing both financial viability and retirement income adequacy.