The Dynamics of the Gender Gap at Retirement in Italy: Evidence from SHARE

We investigate the dynamics of the gender gap at retirement in Italy—by cohort and by year of retirement—for individuals retiring from 1980 to 2027 using data from SHARELIFE (wave 3 and wave 7). Most importantly, we disentangle the opposite effects on the gender gap originating respectively from (i) improving labor market conditions for women, and (ii) increasing actuarial fairness of the pension plan due to the progressive transition from a defined-benefit to a notional defined-contribution scheme. To capture the impact of these two driving forces, we implement a counterfactual analysis by which the gender gap at retirement is measured both in the actual and in the virtual distribution of pension benefits, with the latter being obtained under the hypothesis of an actuarially fair pension scheme. We observe a U-shaped pattern since the actual gender gap at retirement is found to be decreasing up to 2016 but increasing after this date. Specifically, the increasing pattern for the gender gap at retirement after 2016 is shown to be driven by (i) decreasing redistributive impact of the pension scheme, and (ii) women’s penalization in the pro-rata mechanism due to lower contributions paid in the early working life.