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The effects of Social Security Incentives on Retirement in Spain

Author

Listed:
  • Pilar García-Gómez
  • Sílvia Garcia-Mandicó
  • Sergi Jiménez-Martín
  • Judit Vall-Castelló

Abstract

In this paper, we analyze the extent to what financial incentives have influenced individual and couples retirement decisions over the last two decades in Spain. We use administrative data on earnings history to create synthetic measures of financial incentives that we link to individual survey data from the European Community Household Panel and the European Union Statistics on Income and Living Conditions. The occurrence of several major reforms in the period largely facilitates identification. We find that retirement is highly responsive to incentive variables (both ITAX and SSW). We find that a 10% change in the implicit tax rate on working longer increases the probability of retiring by about 0.70 pp (0.90 pp for men and 0.54 for women). Furthermore we find that couple incentives matter more in husband’s retirement decisions than in wife’s retirement decisions.

Suggested Citation

  • Pilar García-Gómez & Sílvia Garcia-Mandicó & Sergi Jiménez-Martín & Judit Vall-Castelló, 2019. "The effects of Social Security Incentives on Retirement in Spain," Studies on the Spanish Economy eee2019-38, FEDEA.
    • Handle: RePEc:fda:fdaeee:eee2019-38
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    References listed on IDEAS

    as
    1. Pilar García-Gómez & Sergi Jiménez-Martín & Judit Vall Castelló, 2018. "Trends in Labor Force Participation of Older Workers in Spain," NBER Chapters, in: Social Security Programs and Retirement around the World: Working Longer, pages 205-230, National Bureau of Economic Research, Inc.
    2. 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.
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    4. Jonathan Gruber & David A. Wise, 2004. "Social Security Programs and Retirement around the World: Micro-Estimation," NBER Books, National Bureau of Economic Research, Inc, number grub04-1, January.
    5. Courtney C. Coile & Phillip B. Levine, 2007. "Labor Market Shocks and Retirement: Do Government Programs Matter?," NBER Chapters, in: Public Policy and Retirement, Trans-Atlantic Public Economics Seminar (TAPES), pages 1902-1919, National Bureau of Economic Research, Inc.
    6. Isabel Cairó-Blanco, 2010. "An empirical analysis of retirement behaviour in Spain: partial versus full retirement," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(3), pages 325-356, July.
    7. Michele Boldrin & Sergi Jiménez-Martín & Franco Peracchi, 2004. "Micro-Modeling of Retirement Behavior in Spain," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 499-578, National Bureau of Economic Research, Inc.
    8. Alfonso Sánchez-Martin & J. García-Pérez & Sergi Jiménez-Martín, 2014. "Delaying the Normal and Early Retirement Ages in Spain: Behavioural and Welfare Consequences for Employed and Unemployed Workers," De Economist, Springer, vol. 162(4), pages 341-375, December.
    9. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, January.
    10. Pilar García-Gómez & Sergi Jiménez Martín & Judit Vall Castelló, 2018. "Trends in Labor Force Participation of Older Workers in Spain 1980-2015," Studies on the Spanish Economy eee2018-04, FEDEA.
    11. Jonathan Gruber & David A. Wise, 1999. "Introduction to "Social Security and Retirement around the World"," NBER Chapters, in: Social Security and Retirement around the World, pages 1-35, National Bureau of Economic Research, Inc.
    12. Courtney Coile, 2018. "Working Longer in the U.S.: Trends and Explanations," NBER Working Papers 24576, National Bureau of Economic Research, Inc.
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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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