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An evaluation of the life-cycle effects of minimum pensions on retirement behaviour: Extended Version

Author

Listed:
  • Sergi Jiménez-Martín

    (Department of Economics, Universitat Pompeu Fabra)

  • Alfonso R Sánchez-Martín

    (Department of Economics, Universidad Pablo de Olavide)

Abstract

In this paper we explore the effects of the minimum pension program on welfare and retirement in Spain. This is done with a stylized life-cycle model which provides a convenient analytical characterization of optimal behavior. We use data from the Spanish Social Security to estimate the behavioral parameters of the model and then simulate the changes induced by the minimum pension in aggregate retirement patterns. The impact is substantial: there is a threefold increase in retirement at 60 (the age of first entitlement) with respect to the economy without minimum pensions, and total early retirement (before or at 60) is almost 50% larger.

Suggested Citation

  • Sergi Jiménez-Martín & Alfonso R Sánchez-Martín, 2006. "An evaluation of the life-cycle effects of minimum pensions on retirement behaviour: Extended Version," Working Papers 06.23, Universidad Pablo de Olavide, Department of Economics.
    • Handle: RePEc:pab:wpaper:06.23
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    References listed on IDEAS

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    More about this item

    Keywords

    Retirement; life cycle model; minimum pension; structural estimation;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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