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From bismarck to beveridge: the other pension reform in Spain

Author

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  • J. Ignacio Conde-Ruiz

    () (Universidad Complutense de madrid and FEDEA)

  • Clara I. González

    () (Banco de España and FEDEA)

Abstract

Aging is an unstoppable process and it remains a major challenge for the sustainability of the PAYG pension system in most developed countries, including in Spain. Many countries need to introduce reforms of their pension systems in order to control their expenditure, and in some cases this has already begun. However, there are other sorts of changes to certain parameters that are perceived as secondary, e.g. the different path of minimum and maximum pensions, and the upper and lower caps on contributions. This has significant implications for the distributive structure of the social security system that cannot be readily perceived by the population. That is why some economists in Spain refer to it as the “Silent Reform”. The aim of this paper is to analyse the consequences this type of reform would have in Spain; indeed, it is the first paper to actually quantify and evaluate the potential impact it would have on the country. We have used an accounting model with heterogeneous agents and overlapping generations in order to project pension expenditures up until 2070. The results show that this kind of reform could potentially contain future expenditure and could also change the nature of the pension system from a contributory or Bismarckian-type system into an assistential or Beveridgean-type one. This change could have significant consequences as both systems have different objectives. The paper also shows that the institutional characteristics that make this kind of reform in Spain feasible are also present in most developed countries with Bismarckian pension systems. Therefore, we believe that the lessons learned in this paper on this kind of reform could well prove useful to other countries.

Suggested Citation

  • J. Ignacio Conde-Ruiz & Clara I. González, 2014. "From bismarck to beveridge: the other pension reform in Spain," Working Papers 1417, Banco de España;Working Papers Homepage.
  • Handle: RePEc:bde:wpaper:1417
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    References listed on IDEAS

    as
    1. J. Ignacio Conde-Ruiz & Clara I. González, 2016. "From Bismarck to Beveridge: the other pension reform in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(4), pages 461-490, November.
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    Cited by:

    1. J. Ignacio Conde-Ruiz & Clara I. González, 2016. "From Bismarck to Beveridge: the other pension reform in Spain," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 7(4), pages 461-490, November.
    2. Julián Díaz Saavedra, 2016. "Productividad y viabilidad del sistema Público de Pensiones," Hacienda Pública Española, IEF, vol. 218(3), pages 11-32, September.
    3. Alina Kulai, 2015. "Integrational Models and Forms of Inter-State Public-Private Partnership: Aspects of Financial Convergence," ACTA VSFS, University of Finance and Administration, vol. 9(1), pages 42-58.
    4. repec:ces:ifodic:v:13:y:2015:i:2:p:19166291 is not listed on IDEAS
    5. Jaroslav Tichý, 2015. "Risks of Mortgage Loans in the Czech Republic," ACTA VSFS, University of Finance and Administration, vol. 9(1), pages 59-73.
    6. Vaclav Zdarek, 2015. "A Robust Search for Determinants of Price Convergence in European Union – Known “Suspects” or New “Villains”?," ACTA VSFS, University of Finance and Administration, vol. 9(1), pages 7-41.
    7. Jaroslav Vostatek, 2015. "Social and Provision Models of Pension Insurance and Savings," ACTA VSFS, University of Finance and Administration, vol. 9(1), pages 74-103.
    8. J. Ignacio Conde-Ruiz & Clara I. González, 2015. "Challenges for Spanish Pensions in the Early 21st Century," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(2), pages 20-24, 08.

    More about this item

    Keywords

    aging population; pension reform; Beveridgean type; Bismarckian type; accounting projection model; overlapping generations;

    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
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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