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Social security and economic performance in Portugal: after all that has been said and done how much has actually changed?

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  • Alfredo Pereira
  • Jorge Andraz

Abstract

This paper provides an empirical estimate of the macroeconomic effects of the Portuguese payas- you-go social security system based on data for the period 1970-2007 and on VAR estimates using GDP, the unit cost of labor, the unemployment rate, the savings rate and social security spending. The major findings are twofold. First, growing social security spending has had detrimental effects on all of the private sector variables under consideration suggesting the existence of sizable inefficiencies. Second, these inefficiencies persist despite the successive reforms that took place over the last two decades. As a corollary, these results highlight the need for structural reforms of the pay-as-you-go system thereby addressing the sources of inefficiencies in addition to dealing with its chronic sustainability problems.
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  • Alfredo Pereira & Jorge Andraz, 2012. "Social security and economic performance in Portugal: after all that has been said and done how much has actually changed?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(2), pages 83-100, August.
    • Handle: RePEc:spr:portec:v:11:y:2012:i:2:p:83-100
    DOI: 10.1007/s10258-012-0082-7
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    2. Alfredo Marvão Pereira & Oriol Roca‐Sagalés, 2011. "Long‐term effects of fiscal policies in Portugal," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 38(1), pages 114-127, January.

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    More about this item

    Keywords

    Social security; Unemployment; Savings; Output; VAR; Portugal; C32; C51; C52; H55;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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