Life expectancy considerably increased in most developed countries during the twentieth century. However, the increase in longevity is neither uniform nor random across individuals belonging to various socioeconomic groups. From an economic policy perspective, the difference in mortality by socioeconomic conditions challenges the fairness of the social security systems. We focus on the case of Italy and aim at measuring differences in longevity at older ages by individuals belonging to different socioeconomic groups, also in order to assess the effective fairness of the Italian public pension system, which is based on a notional defined contribution (NDC) benefit computation formula, whose rules do not take into account individual heterogeneity in expected longevity.
We use a longitudinal dataset that matches survey data on individual features recorded in the Italian module of the EU-SILC, with information on the whole working life and until death collected in the administrative archives managed by the Italian National Social Security Institute. In more detail, we follow until 2009 a sample of 11,281 individuals aged at least 60 in 2005. We use survival analysis and measure the influence of a number of events experienced in the labor market and individual characteristics on mortality. Furthermore, through Kaplan-Meier simulations of hypothetical social groups, adjusted by a Brass relational model, we estimate and compare differences in life expectancy of individuals belonging to different socioeconomic groups.
Our findings confirm that socioeconomic status strongly predicts life expectancy even in old age. All estimated models show that the prevalent type of working activity before retirement is significantly associated with the risk of death, even when controlling for dozens of variables as proxies of individual demographic and socioeconomic characteristics. The risk of death for self-employed individuals is 26% lower than that of employees, and life expectancy at 60 differs by five years between individuals with opposite socioeconomic statuses.
Our study is the first that links results based on a micro survival analysis on subgroups of the elderly population with results related to the entire Italian population. The extreme differences in mortality risks by socioeconomic status found in our study confirm the existence of large health inequalities and strongly question the fairness of the Italian public pension system.