In a recent article we have suggested that net government transfers have substantially contributed to the decline of the aggregate Italian saving rate. Changes in social security laws and regulations which took place in the late sixties and early seventies apparently weakened the link between contributions and benefits permitting a time path of aggregate consumption in excess of what would have occurred in the absence of such changes. In this paper, these results are revised and extended and, if anything, strengthened: slightly less than half the reduction in the private "equilibrium" saving rate observed over the last thirty years appears to be due to the increase of social security wealth. The paper also assesses the likely impact of the 1992 social security reform and suggests that in the long run the impact might be sizeable accounting for up to a 3 points higher saving ratio.
An earlier draft of this paper has been presented to the conference on "The Economics of Saving and Retirement" held in Venice, 12-14 January 1995, and an abridged version will be published in 'Ricerche Economiche'.
