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Sustainability and Adequacy of the Spanish Pension System after the 2013 Reform: A Microsimulation Analysis

Author

Listed:
  • Meritxell Solé

    (Universitat de Barcelona)

  • Guadalupe Souto

    (Universitat Autònoma de Barcelona)

  • Concepció Patxot

    (Universitat de Barcelona)

Abstract

Concerns about the consequences of demographic ageing on the sustainability of the pension system has led to the adoption of reforms reducing pension expenditure. However, the impact of these reforms on pension adequacy is now coming under increasing scrutiny. Taking recent Spanish reform as an example, this paper analyses the extent to which fostering pension sustainability threatens pension adequacy. Using an extension of the DyPeS behavioural microsimulation model, results show that the introduction of mechanisms linking retirement pensions to the evolution of the social security budget balance has strong and negative effects on adequacy. The gains in sustainability are mainly driven by the significant fall in the benefit ratio (average pension to average wage), worsening the relative eco¬nomic position of pensioners throughout forthcoming decades, reversing the past trend.

Suggested Citation

  • Meritxell Solé & Guadalupe Souto & Concepció Patxot, 2019. "Sustainability and Adequacy of the Spanish Pension System after the 2013 Reform: A Microsimulation Analysis," Hacienda Pública Española / Review of Public Economics, IEF, vol. 228(1), pages 109-150, March.
    • Handle: RePEc:hpe:journl:y:2019:v:228:i:1:p:109-150
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    References listed on IDEAS

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    More about this item

    Keywords

    Ageing; Pensions; Pension adequacy; Pension Reforms; Sustainability; Welfare State;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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