The effect of pension rules on retirement monetary incentives with an application to pension reforms in Spain
In this work we theoretically disentangle the effects of pension provisions on a variety of financial incentives to retirement, trying to reconcile them with some key Spanish retirement patterns. We find that the "average" individual, who is never affected by any cap of contributions or benefits, has weak incentives to retire early and strong incentives to retire at the normal retirement age. Alternatively, individuals at the bottom of the wage distribution have strong incentives to retire as early as possible, because ot the interaction between age-related penalties and the minimun pension. Both findings perfectly accommodate the retirement hazard of medium and low earners respectively. In contrast, high earners (those that have their contributions capped) despite having strong incentives to retire at the Early Retirement Age, do not do so. This is because, for those workers, financial incentives are not a good proxy for the marginal utility from working. Finally, we analyze the reasons behind the failure of the 1997 reform in improving the sustainability of the Spanish public pension system.
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.:
- Michele Boldrin & Sergi Jimenez-Martin & Franco Peracchi, 1999.
"Social Security and Retirement in Spain,"
in: Social Security and Retirement around the World, pages 305-353
National Bureau of Economic Research, Inc.
- Peracchi, Franco & Jiménez-Martín, Sergi & Boldrin, Michele, 1997. "Social security and retirement in Spain," UC3M Working papers. Economics 6043, Universidad Carlos III de Madrid. Departamento de Economía.
- Michele Boldrin & Sergi Jimenez-Martni & Franco Peracchi, 1997. "Social Security and Retirement in Spain," NBER Working Papers 6136, National Bureau of Economic Research, Inc.
- Edward P. Lazear, 1974.
"Age, Experience and Wage Growth,"
NBER Working Papers
0051, National Bureau of Economic Research, Inc.
- Samwick, Andrew A., 1998.
"New evidence on pensions, social security, and the timing of retirement,"
Journal of Public Economics,
Elsevier, vol. 70(2), pages 207-236, November.
- Andrew A. Samwick, 1998. "New Evidence on Pensions, Social Security, and the Timing of Retirement," NBER Working Papers 6534, National Bureau of Economic Research, Inc.
- : Michele Boldrin & : Sergi Jiménez-Martín & : Franco Peracchi, .
"Micro-Modelling Of Retirement Behavior In Spain,"
14-02 Classification-JEL , Instituto de Estudios Fiscales.
- Juan Carlos Conesa & Carlos Garriga, 2001. "Sistema Fiscal y Reforma de la Seguridad Social," Working Papers in Economics 67, Universitat de Barcelona. Espai de Recerca en Economia.
- Marimon, Ramon & Scott, Andrew (ed.), 1999. "Computational Methods for the Study of Dynamic Economies," OUP Catalogue, Oxford University Press, number 9780198294979, December.
- Courtney Coile & Jonathan Gruber, 2000. "Social Security and Retirement," NBER Working Papers 7830, National Bureau of Economic Research, Inc.
- James H. Stock & David A. Wise, 1988.
"Pensions, The Option Value of Work, and Retirement,"
NBER Working Papers
2686, National Bureau of Economic Research, Inc.
- Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-80, September.
- Borsch-Supan, Axel, 2000. "Incentive effects of social security on labor force participation: evidence in Germany and across Europe," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 25-49, October.
- Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, Jan-Jun.
When requesting a correction, please mention this item's handle: RePEc:cte:werepe:we013604. 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: (Ana Poveda)
If references are entirely missing, you can add them using this form.