IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Demographic Change and Pension Reform in Spain: An Assessment in a Two-Earner, OLG Model

  • Alfonso R. Sánchez Martín
  • Virginia Sánchez Marcos

Recent pension reforms in Spain have been guided by two opposite goals, achieving financial stability and improving redistributive aspirations. In particular, reforms implemented in 1997/2002 entailed a mixture of both through (i) changes in the pension formula, (ii) the extension in the entitlement to early retirement to all cohorts, and, finally, (iii) increases in survival pensions. This paper builds an Applied General Equilibrium OLG model that captures the fundamental non-stationarity of the Spanish reality (ageing population, education transition and increasing female's attachment to the labour market) to assess the impact of those reforms. As a novel feature with respect to the literature, households in our model economy are made of two potential earners that make saving and labour supply decisions. Our main conclusions from the analysis are at three different levels. First, the Spanish pension system is clearly unsustainable, the pension expenditure will reach a figure of about 18% of the GDP in 2050, and the reforms have been clearly ineffective in improving the financial prospects of it. Second the reforms have had substantial redistributed effects, benefiting low educated groups against high educated and future cohorts against current cohorts. Finally we show that exploring the financial prospects with traditional single earner households models may result in underestimates of the future financial burden of the pension system.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://documentos.fedea.net/pubs/dt/2009/dt-2009-40.pdf
Download Restriction: no

Paper provided by FEDEA in its series Working Papers with number 2009-40.

as
in new window

Length:
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:fda:fdaddt:2009-40
Contact details of provider: Web page: http://www.fedea.net

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.:

as in new window
  1. Luis A. Puch & Omar Licandro, 1997. "Are there any special features in the Spanish business cycle?," Investigaciones Economicas, Fundación SEPI, vol. 21(2), pages 361-394, May.
  2. John Karl Scholz & Ananth Seshadri & Surachai Khitatrakun, 2006. "Are Americans Saving "Optimally" for Retirement?," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 607-643, August.
  3. Greenwood,J. & Seshadri,A. & Yorukoglu,M., 2002. "Engines of liberation," Working papers 1, Wisconsin Madison - Social Systems.
  4. Elizabeth M. Caucutt & Nezih Guner & John Knowles, 2002. "Why Do Women Wait? Matching, Wage Inequality, and the Incentives for Fertility Delay," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 815-855, October.
  5. Kaygusuz, Remzi, 2011. "Social security and two-earner households," MPRA Paper 32358, University Library of Munich, Germany.
  6. Mark Huggett & Gustavo Ventura, 1999. "On the Distributional Effects of Social Security Reform," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(3), pages 498-531, July.
  7. Imrohoroglu, Ayse & Imrohoroglu, Selahattin & Joines, Douglas H, 1995. "A Life Cycle Analysis of Social Security," Economic Theory, Springer, vol. 6(1), pages 83-114, June.
  8. 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.
  9. Kjetil Storesletten & Chris Telmer & Amir Yaron, 1998. "The risk sharing implications of alternative social security arrangements," GSIA Working Papers 252, Carnegie Mellon University, Tepper School of Business.
  10. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-45, July.
  11. Paula Adam, 1996. "Mothers in an insider-outsider economy: The puzzle of Spain," Journal of Population Economics, Springer, vol. 9(3), pages 301-323.
  12. Juan A. Rojas, . "Life-cycle Earnings Cohort Size Effects and Social Security. A Quantitative Exploration," Studies on the Spanish Economy 88, FEDEA.
  13. Attanasio, O. & Low, H. & Sanchez-Marcos, V., 2004. "Explaining Changes in Female Labour Supply in a Life-cycle Model," Cambridge Working Papers in Economics 0451, Faculty of Economics, University of Cambridge.
  14. 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.
  15. Adam, Paula, 1996. "Mothers in an Insider-Outsider Economy: The Puzzle of Spain," Journal of Population Economics, Springer, vol. 9(3), pages 301-23, August.
  16. Bernard Casey & Howard Oxley & Edward R. Whitehouse & Pablo Antolín & Romain Duval & Willi Leibfritz, 2003. "Policies for an Ageing Society: Recent Measures and Areas for Further Reform," OECD Economics Department Working Papers 369, OECD Publishing.
  17. Hurd, Michael D, 1989. "Mortality Risk and Bequests," Econometrica, Econometric Society, vol. 57(4), pages 779-813, July.
  18. Laurence J. Kotlikoff & Kent Smetters & Jan Walliser, 2002. "Distributional Effects in a General Equilibrium Analysis of Social Security," NBER Chapters, in: The Distributional Aspects of Social Security and Social Security Reform, pages 327-370 National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fda:fdaddt:2009-40. 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: (Carmen Arias)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.