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The Demographic and Educational Transitions and the Sustainability of the Spanish Public Pension System

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  • Díaz-Giménez, Javier
  • Díaz-Saavedra, Julián

Abstract

We use a calibrated overlapping generations model economy to quantify the consequences of the demographic and the educational transitions for the viability of the Spanish public pension system. The households in our model economy differ in their education and in the random market value of their time, they understand the link between payroll taxes and public pensions, and they choose when to retire from the labor force. We find that the demographic transition makes the public pension system in our model economy unsustainable. The pension system starts running a deficit in the year 2016, the pension fund is depleted in the year 2029, and the accumulated pension deficits reach a shocking 277 percent of the model economy output by the year 2060.

Suggested Citation

  • Díaz-Giménez, Javier & Díaz-Saavedra, Julián, 2006. "The Demographic and Educational Transitions and the Sustainability of the Spanish Public Pension System," MPRA Paper 69287, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69287
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    References listed on IDEAS

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    Cited by:

    1. Javier Vazquez Grenno, 2010. "Spanish pension system: Population aging and immigration policy," Hacienda Pública Española / Review of Public Economics, IEF, vol. 195(4), pages 37-64, december.
    2. 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.
    3. Javier Diaz-Gimenez & Julian Diaz-Saavedra, 2009. "Delaying Retirement in Spain," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 147-167, January.

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    More about this item

    Keywords

    Computable general equilibrium; Social Security;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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