Coping with Spain's aging: retirement rules and incentives
This paper evaluates the macroeconomic and welfare effects of extending the averaging period used to calculate pension benefits in a pay-as-you-go system. It also examines the complementarities between reforms extending the averaging period and those increasing the retirement age under alternative tax policies. The analysis is based on a model in the Auerbach-Kotlikoff tradition applied to the Spanish economy. Without reforms, the simulations suggest that aging-related spending as a share of output will increase 16 percentage points by 2050, which are twice as much as in European Commission (2006) projections due to general equilibrium effects. Also, reforms extending the averaging period to the entire work life limit expenditure pressures at the peak of the demographic shock as much as increasing the retirement age in line with life expectancy (4 percentage points of GDP). These reforms and prefunding the demographic shock mitigate the adverse macroeconomic effects of aging and improve welfare.
(This abstract was borrowed from another version of this item.)
Volume (Year): 9 (2010)
Issue (Month): 04 (October)
|Contact details of provider:|| Postal: |
Web page: http://journals.cambridge.org/jid_PEFEmail:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sánchez Martín, Alfonso R., 2010.
"Endogenous retirement and public pension system reform in Spain,"
Elsevier, vol. 27(1), pages 336-349, January.
- Alfonso R Sánchez-Martín, 2008. "Endogenous Retirement and Public Pension System Reform in Spain," Working Papers 08.06, Universidad Pablo de Olavide, Department of Economics.
- Alfonso R. Sánchez Martín, 2001. "Endogenous Retirement And Public Pension System Reform In Spain," Economics Working Papers we013503, Universidad Carlos III, Departamento de Economía.
- Lindbeck, Assar & Persson, Mats, 2002.
"The Gains from Pension Reform,"
Working Paper Series
580, Research Institute of Industrial Economics.
- Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66, pages 467.
- Juan A. Rojas, .
"Life-cycle Earnings Cohort Size Effects and Social Security. A Quantitative Exploration,"
Studies on the Spanish Economy
- 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.
- Juan F. Jimeno & Juan A. Rojas & Sergio Puente, 2006.
"Modeling the impact of aging on social security expenditures,"
Banco de Espa�a Occasional Papers
0601, Banco de Espa�a.
- Jimeno, Juan F. & Rojas, Juan A. & Puente, Sergio, 2008. "Modelling the impact of aging on social security expenditures," Economic Modelling, Elsevier, vol. 25(2), pages 201-224, March.
- Hansen, G D, 1993.
"The Cyclical and Secular Behaviour of the Labour Input: Comparing Efficiency Units and Hours Worked,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 8(1), pages 71-80, Jan.-Marc.
- Hansen, G.D., 1991. "The Cyclical and Secular Behavior of the Labor Input : Comparing Efficiency Units and Hours Worked," Papers 36, California Los Angeles - Applied Econometrics.
- de Cordoba, Gonzalo Fernandez & Kehoe, Timothy J., 2000. "Capital flows and real exchange rate fluctuations following Spain's entry into the European Community," Journal of International Economics, Elsevier, vol. 51(1), pages 49-78, June.
- Ángel Estrada & José Luis Fernández & Esther Moral & Ana V. Regil, 2004. "A quarterly macroeconometric model of the Spanish Economy," Banco de Espa�a Working Papers 0413, Banco de Espa�a.
- Laurence J. Kotlikoff, 1998. "The A-K Model: It's Past, Present, and Future," NBER Working Papers 6684, National Bureau of Economic Research, Inc.
- Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 1999. "Privatizing Social Security in the U.S. -- Comparing the Options," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(3), pages 532-574, July.
- Alan S. Blinder & Roger H. Gordon & Donald E. Wise, 1980. "Reconsidering the Work Disincentive Effects of Social Security," NBER Working Papers 0562, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:cup:jpenef:v:9:y:2010:i:04:p:549-581_99. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.