[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/gra/wpaper/14-03.html
   My bibliography  Save this paper

The Future of Spanish Pensions

Author

Listed:
  • Javier Diaz Gimenez

    (IESE Business School)

  • Julian Diaz Saavedra

    (Department of Economic Theory and Economic History, University of Granada.)

Abstract
We use an overlapping generations model economy with endogenous retirement to study the 2011 and 2013 reforms of the Spanish public pension system. We nd that this latest reforms, which extend the number of years os contributions used to compute the pensions, delay the retirement ages, introduce two sustainability factors, and e ectively transform the Spanish pay-as-yougo system into a de ned-contribution system, succeed in making Spanish pensions sustainable until 2037, but they fail to do so afterwards. The success until 2037 is achieved reducing the real value of the average pension and leaving the many loopholes of the contributivity and the transparency of the system unchanged. This reduction in pensions is progressive and, by 2037, the average pension will be approximately 20 percent smaller in real terms than what it would have been under the pension rules prevailing in 2010. The 2013 pension reform fails after 2037 because, from that year onwards, approximately 50 percent of the Spanish retirees will be paid the minimum pension, which is exempt from the sustainability factors. We conjecture that further reforms lurk in the future of Spanish pensions.

Suggested Citation

  • Javier Diaz Gimenez & Julian Diaz Saavedra, 2014. "The Future of Spanish Pensions," ThE Papers 14/03, Department of Economic Theory and Economic History of the University of Granada..
    • Handle: RePEc:gra:wpaper:14/03
    as

    Download full text from publisher

    File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers14_03.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Raquel Vegas & Isabel Argimón & Marta Botella & Clara I. González, 2009. "Retirement behaviour and retirement incentives in Spain," Working Papers 0913, Banco de España.
    2. Rojas, Juan A., 2005. "Life-cycle earnings, cohort size effects and social security: a quantitative exploration," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 465-485, February.
    3. Gouveia, Miguel & Strauss, Robert P., 1994. "Effective Federal Individual Tax Functions: An Exploratory Empirical Analysis," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(2), pages 317-339, June.
    4. Joan Gil & Miguel Angel López García & Jorge Onrubia & Cío Patxot & Guadalupe Souto, 2007. "A projection model of the contributory pension expenditure of the spanish social security system: 2004-2050," Hacienda Pública Española / Review of Public Economics, IEF, vol. 182(3), pages 75-116, September.
    5. Michele Boldrin & Sergi Jimenez-Martin & Franco Peracchi, 1999. "Social Security and Retirement in Spain," NBER Chapters, in: Social Security and Retirement around the World, pages 305-353, National Bureau of Economic Research, Inc.
    6. Clara Isabel González & J. Ignacio Conde-Ruiz & Michele Boldrin, 2008. "Immigration and Social Security in Spain," Working Papers 2008-36, FEDEA.
    7. Gouveia, Miguel & Strauss, Robert P., 1994. "Effective Federal Individual Tax Functions: An Exploratory Empirical Analysis," National Tax Journal, National Tax Association, vol. 47(2), pages 317-39, June.
    8. De La Fuente, Angel & Doménech, Rafael, 2013. "The financial impact of Spanish pension reform: A quick estimate," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(1), pages 111-137, January.
    9. Luisa Fuster & Ayşe İmrohoroğlu & Selahattin İmrohoroğlu, 2007. "Elimination of Social Security in a Dynastic Framework," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(1), pages 113-145.
    10. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1.
    11. J. Ignacio Conde-Ruiz & Clara I. González, 2013. "Reforma de pensiones 2011 en España," Hacienda Pública Española / Review of Public Economics, IEF, vol. 204(1), pages 9-44, March.
    12. Jonathan Gruber & David A. Wise, 1999. "Introduction to "Social Security and Retirement around the World"," NBER Chapters, in: Social Security and Retirement around the World, pages 1-35, National Bureau of Economic Research, Inc.
    13. Angel Melguizo & Manuel Balmaseda & David Taguas, 2005. "Las reformas necesarias en el sistema de pensiones contributivas en Espana," Working Papers 0505, BBVA Bank, Economic Research Department.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pilar García-Gómez & Sílvia Garcia-Mandicó & Sergi Jiménez-Martín & Judit Vall-Castelló, 2018. "Trends in Employment and Social Security Incentives in the Spanish Pension System, 1980–2016," NBER Chapters, in: Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, pages 317-371, National Bureau of Economic Research, Inc.
    2. Díaz-Saavedra, Julián, 2020. "The fiscal and welfare consequences of the price indexation of Spanish pensions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 19(2), pages 163-184, April.
    3. Julián Díaz Saavedra, 2016. "Productividad y viabilidad del sistema Público de Pensiones," Hacienda Pública Española / Review of Public Economics, IEF, vol. 218(3), pages 11-32, September.
    4. Filipe de Oliveira Bello & Onofre Alves Simões, 2021. "Reform of the Brazilian RGPS Pensions System," Working Papers REM 2021/0191, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    5. Javier Diaz Gimenez & Javier Diaz Jimenez, 2017. "Catalonia; Independence and Pensions," ThE Papers 17/04, Department of Economic Theory and Economic History of the University of Granada..
    6. Esteban García-Miralles & Nezih Guner & Roberto Ramos, 2019. "The Spanish personal income tax: facts and parametric estimates," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 10(3), pages 439-477, November.
    7. Pérez, Carlos & Martín-Román, Ángel & Moral, Alfonso, 2020. "Two decades of the complementary leisure effect in Spain," The Journal of the Economics of Ageing, Elsevier, vol. 15(C).
    8. J. Ignacio Conde-Ruiz & Clara I. González, 2016. "From Bismarck to Beveridge: the other pension reform in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(4), pages 461-490, November.
    9. Edouard Ribes, 2022. "What are the financial implications of an ageing population for European citizens?," Working Papers hal-03118783, HAL.
    10. Enrique Devesa & Mar Devesa & Inmaculada Dominguez-Fabián & Borja Encinas & Robert Meneu, 2020. "The Sustainability Factor: How Much Do Pension Expenditures Improve in Spain?," Risks, MDPI, vol. 8(4), pages 1-21, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julian Diaz Saavedra, 2014. "Early Retirement, Social Security, and Output Gap," ThE Papers 14/01, Department of Economic Theory and Economic History of the University of Granada..
    2. Cassou, Steven P. & Gorostiaga, Arantza & Uribe-Zubiaga, Iker, 2013. "Policy effects of the elasticity of substitution across labor types in life cycle models," Economic Modelling, Elsevier, vol. 35(C), pages 59-70.
    3. Pilar García-Gómez & Sílvia Garcia-Mandicó & Sergi Jiménez-Martín & Judit Vall-Castelló, 2018. "Trends in Employment and Social Security Incentives in the Spanish Pension System, 1980–2016," NBER Chapters, in: Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, pages 317-371, National Bureau of Economic Research, Inc.
    4. J. Ignacio Conde-Ruiz & Clara I. González, 2016. "From Bismarck to Beveridge: the other pension reform in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(4), pages 461-490, November.
    5. Sánchez Martín, Alfonso R., 2010. "Endogenous retirement and public pension system reform in Spain," Economic Modelling, Elsevier, vol. 27(1), pages 336-349, January.
    6. Julián Díaz Saavedra, 2016. "Productividad y viabilidad del sistema Público de Pensiones," Hacienda Pública Española / Review of Public Economics, IEF, vol. 218(3), pages 11-32, September.
    7. J. Ignacio Conde-Ruiz & Clara I. González, 2013. "Reforma de pensiones 2011 en España," Hacienda Pública Española / Review of Public Economics, IEF, vol. 204(1), pages 9-44, March.
    8. Julian Diaz Saavedra, 2013. "Age-dependent Taxation, Retirement Behavior, and Work Hours Over the Life Cycle," ThE Papers 13/09, Department of Economic Theory and Economic History of the University of Granada..
    9. Javier Diaz-Gimenez & Julian Diaz-Saavedra, 2009. "Delaying Retirement in Spain," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 147-167, January.
    10. Sergi Jiménez Martín & Judit Vall Castello, 2009. "Business Cycle Effects on Labour Force Transitions for Older People in Spain," Working Papers 2009-25, FEDEA.
    11. Alfonso Sánchez-Martin & J. García-Pérez & Sergi Jiménez-Martín, 2014. "Delaying the Normal and Early Retirement Ages in Spain: Behavioural and Welfare Consequences for Employed and Unemployed Workers," De Economist, Springer, vol. 162(4), pages 341-375, December.
    12. Tran, Chung & Woodland, Alan, 2014. "Trade-offs in means tested pension design," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 72-93.
    13. Vogel, Edgar & Ludwig, Alexander & Börsch-Supan, Axel, 2017. "Aging and pension reform: extending the retirement age and human capital formation," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(1), pages 81-107, January.
    14. Conde-Ruiz, J. Ignacio & Gonzalez, Clara I., 2012. "Spain 2011 Pension Reform," Working Papers 2012-03, FEDEA.
    15. Clara Isabel González & J. Ignacio Conde-Ruiz & Michele Boldrin, 2008. "Immigration and Social Security in Spain," Working Papers 2008-36, FEDEA.
    16. Pilar García-Gómez & Sílvia Garcia-Mandicó & Sergi Jiménez-Martín & Judit Vall-Castelló, 2024. "The Effects of Social Security Incentives on Retirement in Spain," NBER Chapters, in: Social Security Programs and Retirement around the World: The Effects of Reforms on Retirement Behavior, National Bureau of Economic Research, Inc.
    17. Jung, Juergen & Tran, Chung, 2022. "Social health insurance: A quantitative exploration," Journal of Economic Dynamics and Control, Elsevier, vol. 139(C).
    18. Angel de la Fuente, 2015. "A Simple Model of Aggregate Pension Expenditure," Hacienda Pública Española / Review of Public Economics, IEF, vol. 212(1), pages 13-50, March.
    19. Börsch-Supan, A. & Härtl, K. & Leite, D.N., 2016. "Social Security and Public Insurance," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 781-863, Elsevier.
    20. Sílvia Garcia-Mandicó & Sergi Jiménez-Martín, 2020. "Spillovers in pension incentives and the joint retirement behavior of Spanish couples," Working Papers 2020-13, FEDEA.

    More about this item

    Keywords

    Computable general equilibrium; social security reform; retirement.;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gra:wpaper:14/03. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Angel Solano Garcia. (email available below). General contact details of provider: https://edirc.repec.org/data/dtugres.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.