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The Effects of Social Security Incentives on Retirement in Spain

Author

Listed:
  • Pilar García-Gómez
  • Silvia Garcia-Mandicó
  • Sergi Jimenez-Martin
  • 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 histories 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 ocurrence 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 & Silvia Garcia-Mandicó & Sergi Jimenez-Martin & Judit Vall Castelló, 2023. "The Effects of Social Security Incentives on Retirement in Spain," NBER Working Papers 31956, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31956
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    References listed on IDEAS

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    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. 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.
    3. Michele Boldrin & Sergi Jimenez-Martin & Franco Peracchi, 1999. "Social Security and Retirement in Spain," NBER Chapters, in: Social Security and Retirement around the World, pages 305-353, National Bureau of Economic Research, Inc.
    4. 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.
    5. 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.
    6. 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.
    7. Courtney Coile, 2018. "Working Longer in the U.S.: Trends and Explanations," NBER Working Papers 24576, National Bureau of Economic Research, Inc.
    8. Jean-Olivier Hairault & Francois Langot & Thepthida Sopraseuth, 2010. "Distance to Retirement and Older Workers' Employment: The Case for Delaying the Retirement Age," Journal of the European Economic Association, MIT Press, vol. 8(5), pages 1034-1076, September.
    9. 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.
    10. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1.
    11. 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.
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    JEL classification:

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

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