Leveraging an Italian labour market reform known as the Jobs Act (JA), I study the effect of employment risk on household consumption and labour supply. The JA reduced protection against unlawful individual termination only for workers hired after March 6, 2015. Using this time-based discontinuity in employment protection as a source of exogenous variation in employment risk, I find that workers subject to the reform consume between 9-10% less than workers hired before March 6, 2015. The effect is stronger among individuals younger than 40 and for those living in Northern Italy, the wealthiest region of the country. Finally, I show that a variant of the Bewley–Huggett–Aiyagari model, augmented with ex-ante employment risk heterogeneity, closely matches the empirical result on consumption, and that risk accounts for most of the effect.

Grants: Fulbright Visiting Scholarship - Fulbright Italy

Presented at: CSEF PhD Seminar (March 2024, November 2025), Stanford PhD Macro Lunch (March 2025), 5th Sailing the Macro Workshop, 40th AIEL  Annual Conference - University of Milano-Bicocca, 4th PhD and Postdocs Naples School of Economics Workshop (September 2025)

This paper studies how retirement affects household portfolio allocation using rich panel data from the Italian Survey on Household Income and Wealth (SHIW) between 2012 and 2022. Exploiting exogenous variation in pension eligibility rules, we estimate a two-stage least squares with individual and time fixed effects to identify the causal impact of retirement on financial investment behavior. We find that retirement leads to a significant increase in stock holdings: the share of financial wealth invested in stocks rises by 8.2 percentage points, and the probability of  articipating in the stock market increases by 23 percentage points. This reallocation is mostly driven by publicly traded stocks. We interpret these findings through the lens of precautionary saving: as retirement reduces income risk exposure, the incentive to hold liquid, low-return assets weakens, and people shift toward higher-yielding investments. This effect is particularly pronounced for seniority-eligible individuals - i.e., those with longer, more stable career paths and higher pension benefits - while it is not statistically significant among old-age retirees, who are more likely to have experienced long unemployment spells and remain liquidity-constrained.

Do people factor information about the national pension system into their retirement expectations, consumption, and investment decisions? This paper, using a novel representative sample of working Italians aged 15 to 75, introduces an exogenous variation in information by exposing half of the sample to news about the pension system. I find that exposure to the information treatment leads individuals to revise their planned retirement age upward by around nine months, a result consistent with recent empirical literature. On the other hand, there is no effect on expected pension benefits. This suggests that workers have a “target pension benefit” and adjust their working horizon accordingly. I then examine the effect of the treatment on consumption and financial investments. Treated individuals reduce their spending by 9% after the treatment and are 6% more likely to hold a private pension plan. These effects are stronger among younger individuals and private-sector workers.

Presented at: Naples School of Economics Summer School in Economics and Finance - Poster Session (June 2025)