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Pension expenditure determinants: the case of Portugal

Author

Listed:
  • Maria Teresa Medeiros Garcia

    (Lisbon School of Economics and Management, Universidade de Lisboa, Lisboa, Portugal)

  • AndrĂ© Fernando Rodrigues Rocha da Silva

    (Lisbon School of Economics and Management, Universidade de Lisboa, Lisboa, Portugal)

Abstract

Assessing pension expenditure determinants is crucial for the sustainability of public finances. This study aims to disentangle the impact of demographic and economic variables, such as ageing, productivity, and unemployment, on pension expenditure in Portugal. With the use of time-series data, from 1975 to 2014, statistical evidence was found of co-integration between unemployed people aged between 15 and 64 years old, apparent productivity of labour, the old age dependency ratio and pension expenditure as a share of gross domestic product. The use of a vector error correction model, with impulse-response functions and variance decomposition, showed that ageing has an almost insignificant impact in the long-run, when compared with unemployment and productivity.

Suggested Citation

  • Maria Teresa Medeiros Garcia & AndrĂ© Fernando Rodrigues Rocha da Silva, 2023. "Pension expenditure determinants: the case of Portugal," Public Sector Economics, Institute of Public Finance, vol. 47(2), pages 177-203.
    • Handle: RePEc:ipf:psejou:v:47:y:2023:i:2:p:177-203
    DOI: 10.3326/pse.47.2.2
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    References listed on IDEAS

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    More about this item

    Keywords

    pension expenditure; ageing; productivity; unemployment; linear regression analysis;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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