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Spanish Pension System: Population Aging and Immigration Policy

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  • Javier Vázquez Grenno

    () (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

Abstract

There is a widespread consensus in the literature that, as consequence of the demographic transition, the current Spanish pension system will become unsustainable in the next decades. In this article we evaluate the sustainability of the contributory pensions' sub-system, taking into account the demographic projections by the Spanish Statistical Oce (INE). A baseline scenario is projected as well as several reforms are simulated, focusing on: (i) selective immigration policy, (ii) changes in the way of tting the pensions and (iii) increase of the legal age of retirement up to 68. The main results are the following. The current system would not incur de cits until 2018, from then de cits will begin to be accumulated. The expenditure in pensions practically would double (from 8.3 % in 2005 to 17.2 % in 2050). A selective immigration policy -towards foreign young people- would help, but does not solve the long-term sustainability of the current system. A policy that combines a pensions' growth at a pace lower than productivity growth and extends the legal age of retirement up to 68 would give solvency to the system beyond 2029.

Suggested Citation

  • Javier Vázquez Grenno, 2009. "Spanish Pension System: Population Aging and Immigration Policy," Working Papers wpdea0902, Department of Applied Economics at Universitat Autonoma of Barcelona.
  • Handle: RePEc:uab:wprdea:wpdea0902
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    References listed on IDEAS

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    1. Kjetil Storesletten, 2000. "Sustaining Fiscal Policy through Immigration," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 300-323, April.
    2. Castro Martín Teresa & Roig Vila Marta, 2007. "Immigrant Mothers, Spanish Babies. Childbearing Patterns of Foreign Women in Spain," Working Papers 201086, Fundacion BBVA / BBVA Foundation.
    3. Joan Gil & Miguel Angel López García & Jorge Onrubia & Cío Patxot & Guadalupe Souto, 2007. "A projection model of the contributory pension expenditure of the spanish social security system: 2004-2050," Hacienda Pública Española, IEF, vol. 182(3), pages 75-116, September.
    4. 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.
    5. Poul Schou, 2006. "Immigration, integration and fiscal sustainability," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(4), pages 671-689, October.
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    12. Javier Alonso Meseguer & José A. Herce, "undated". "Balance del sistema de pensiones y boom migratorio en España. Proyecciones del modelo MODPENS de FEDEA a 2050," Working Papers 2003-02, FEDEA.
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    More about this item

    Keywords

    Immigration policy; public pensions; sustainability.;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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