IDEAS home Printed from https://ideas.repec.org/p/bge/wpaper/542.html
   My bibliography  Save this paper

The Impact of Spanish Pension Reform on Expenditure: a Quick Estimate

Author

Listed:
  • Angel de la Fuente
  • Rafael Doménech

Abstract

In this paper we present a preliminary estimate of the impact of the recent agreement between the Spanish government and the social partners to reform the public contributive pension system. After updating the projections of pension expenditure constructed in de la Fuente and Doménech (2010) for the period 2008-60, we analyze the impact on this variable of raising the retirement age from 65 to 67 years, extending from 15 to 25 years the period over which wages are averaged to calculate the starting pension and increasing from 35 to 37 the number of contribution years required to obtain a "full pension." Conditional on a series of assumptions about the evolution of employment, productivity and demographics, our estimates suggest that these measures will reduce pension expenditure by up to two percentage points of GDP once the reforms have been fully implemented in 2027. On the other hand, the existing uncertainty about the future evolution of the relevant variables suggests that it would be desirable to bring forward in time the introduction of the periodic evaluation of the system (the so-called sustainability factor) so as to have in place a mechanism that can be used to modulate the rhythm and scope of the reform if the system's financial situation requires it before the end of the transitional period.

Suggested Citation

  • Angel de la Fuente & Rafael Doménech, 2011. "The Impact of Spanish Pension Reform on Expenditure: a Quick Estimate," Working Papers 542, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:542
    as

    Download full text from publisher

    File URL: https://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/542.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Angel de la Fuente, 2015. "A Simple Model of Aggregate Pension Expenditure," Hacienda Pública Española / Review of Public Economics, IEF, vol. 212(1), pages 13-50, March.
    2. Javier Alonso Meseguer & J. Ignacio Conde-Ruiz, 2007. "Reforma de las pensiones: la experiencia internacional," Working Papers 2007-18, FEDEA.
    3. Jimeno, Juan F. & Rojas, Juan A. & Puente, Sergio, 2008. "Modelling the impact of aging on social security expenditures," Economic Modelling, Elsevier, vol. 25(2), pages 201-224, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Angel de la Fuente, 2015. "A Simple Model of Aggregate Pension Expenditure," Hacienda Pública Española / Review of Public Economics, IEF, vol. 212(1), pages 13-50, March.
    2. Conde-Ruiz, J. Ignacio & Gonzalez, Clara I., 2012. "Spain 2011 Pension Reform," Working Papers 2012-03, FEDEA.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tânia Santos & Inmaculada Domínguez-Fabián, 2011. "Financial solvency of pension systems in the European Union," EcoMod2011 2916, EcoMod.
    2. Angel de la Fuente, 2009. "Series enlazadas de algunos agregados económicos regionales, 1955-2007. Versión 1.1," Economic Reports 02-09, FEDEA.
    3. Patxot, Concepció & Rentería, Elisenda & Souto, Guadalupe, 2015. "Can we keep the pre-crisis living standards? An analysis based on NTA profiles in Spain," The Journal of the Economics of Ageing, Elsevier, vol. 5(C), pages 54-62.
    4. Angel Melguizo & Manuel Balmaseda & David Taguas, 2005. "Las reformas necesarias en el sistema de pensiones contributivas en Espana," Working Papers 0505, BBVA Bank, Economic Research Department.
    5. 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.
    6. Catalán, Mario & Guajardo, Jaime & Hoffmaister, Alexander W., 2010. "Coping with Spain's aging: retirement rules and incentives," Journal of Pension Economics and Finance, Cambridge University Press, vol. 9(4), pages 549-581, October.
    7. Angel de la Fuente, 2015. "A Simple Model of Aggregate Pension Expenditure," Hacienda Pública Española / Review of Public Economics, IEF, vol. 212(1), pages 13-50, March.
    8. Sabine Le Bayon, 2008. "L'Espagne de Zapatero : rupture ou continuité ?," Post-Print hal-03473698, HAL.
    9. Garloff, Alfred & Roth, Duncan, 2016. "Regional age structure and young workers' wages," IAB-Discussion Paper 201606, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. 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.
    11. Marcin Bielecki & Karolina Goraus & Jan Hagemejer & Joanna Tyrowicz, 2014. "The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes," Working Papers 2014-12, Faculty of Economic Sciences, University of Warsaw.
    12. Friese, Max, 2015. "The labor market effect of demographic change: Alleviation for financing social security," Thuenen-Series of Applied Economic Theory 138 [rev.], University of Rostock, Institute of Economics.
    13. Brindusa Mihaela RADU & Mariana BALAN, 2023. "Demographic Aging Of The Population €“ Implications On The Labor Market," Internal Auditing and Risk Management, Athenaeum University of Bucharest, vol. 68(2), pages 9-16, September.
    14. Yuehong Tian & Xianglian Zhao, 2016. "Stochastic Forecast of the Financial Sustainability of Basic Pension in China," Sustainability, MDPI, vol. 8(1), pages 1-17, January.
    15. Alfonso R. Sánchez, 2014. "The automatic adjustment of pension expenditures in Spain:an evaluation of the 2013 pension reform," Working Papers 1420, Banco de España.
    16. Mira Krpan & Ana Pavkovic & Berislav Zmuk, 2020. "Cluster analysis of new EU member states' pension systems," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 18(2B), pages 208-222.
    17. Jan Hagemejer & Marcin Bielecki & Karolina Goraus & Joanna Tyrowicz, 2014. "The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes," EcoMod2014 6868, EcoMod.
    18. Vogt, Tobias C. & Kluge, Fanny A., 2015. "Can public spending reduce mortality disparities? Findings from East Germany after reunification," The Journal of the Economics of Ageing, Elsevier, vol. 5(C), pages 7-13.
    19. Manuela Bosch-Princep (Universitat de Barcelona) & Daniel Vilalta (Independent Pension Consultant), 2012. "Quantitative reduction in retirement benefits by the 2011 Spanish Social Security reform," Working Papers in Economics 281, Universitat de Barcelona. Espai de Recerca en Economia.
    20. Hans Fehr, 2009. "Computable Stochastic Equilibrium Models and Their Use in Pension- and Ageing Research," De Economist, Springer, vol. 157(4), pages 359-416, December.

    More about this item

    Keywords

    pension reform; Spain; retirement age;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bge:wpaper:542. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bruno Guallar (email available below). General contact details of provider: https://edirc.repec.org/data/bargses.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.