Endogenous Retirement and Public Pension System Reform in Spain
AbstractAll around the world, population aging has spurred developed countries to reform their PAYG pension systems. In particular, delaying legal retirement ages and reducing the generosity of pension benefits have been widely implemented changes. In this paper we assess how successful those policies can be in the case of the Spanish economy, and compare with the results obtained by the already implemented reforms (1997 and 2001). This evaluation is accomplished in a heterogeneous-agents, applied general equilibrium model where individuals can adjust their retirement ages in response to changes in pension rules. We check the ability of the model to reproduce the basic stylized facts of retirement behavior (specially the pattern of early retirement induced by minimum pensions). We then use to model to explore the impact of pension reforms. We find that already implemented changes actually increase the implicit liabilities of the system, while delaying the legal retirement age to 68 may roughly halve the size of the current pension debt.
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Bibliographic InfoPaper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 08.06.
Length: 31 pages
Date of creation: Mar 2008
Date of revision:
Pension System Reform; Applied General Equilibrium; Retirement.;
Other versions of this item:
- Sánchez Martín, Alfonso R., 2010. "Endogenous retirement and public pension system reform in Spain," Economic Modelling, Elsevier, vol. 27(1), pages 336-349, January.
- Alfonso R. Sánchez Martín, 2001. "Endogenous Retirement And Public Pension System Reform In Spain," Economics Working Papers we013503, Universidad Carlos III, Departamento de Economía.
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
This paper has been announced in the following NEP Reports:
- NEP-AGE-2008-03-25 (Economics of Ageing)
- NEP-ALL-2008-03-25 (All new papers)
- NEP-LAB-2008-03-25 (Labour Economics)
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