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An evaluation of the life-cycle effects of minimum pensions on retirement behavior

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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 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.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 715.

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Date of creation: Oct 2003
Date of revision: Jun 2006
Handle: RePEc:upf:upfgen:715

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Web page: http://www.econ.upf.edu/

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Keywords: Retirement; life cycle model; minimum pension; structural estimation;

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  1. Los parámetros del sistema de pensiones: generosidad, redistribución y políticas de mínimos
    by Sergi Jiménez in Nada Es Gratis on 2010-10-29 22:30:50
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