Skip to main content
    • Aa
    • Aa

Coping with Spain's aging: retirement rules and incentives*


This paper evaluates the macroeconomic and welfare effects of extending the averaging period used to calculate pension benefits in a pay-as-you-go system. It also examines the complementarities between reforms extending the averaging period and those increasing the retirement age under alternative tax policies. The analysis applies a model in the Auerbach-Kotlikoff tradition to the Spanish economy. Extending the averaging period to the entire work life maximizes long-run welfare and limits expenditure pressures at the peak of the demographic shock as much as increasing the retirement age in line with life expectancy. Moreover, during the demographic transition, pension reforms induce intertemporal labor substitution effects that engender aggregate labor cycles.

Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

Mariacristrina De Nardi , Imrohoroglu Selahattin , and Thomas Sargent (1999) Projected US demographics and social security. Review of Economic Dynamics, 2: 575615.

Gonzalo Fernandez de Cordoba and Timothy Kehoe (2000) Capital flows and real exchange rate fluctuations following Spain's entry into the European Community. Journal of International Economics, 51: 4978.

Gary Hansen (1993) The cyclical and secular behavior of the labor input: comparing efficiency units and hours worked. Journal of Applied Econometrics, 8(1): 7180.

Laurence Kotlikoff , Kent Smetters , and Jan Walliser (1999) Privatizing social security in the US: comparing the options. Review of Economic Dynamics, 2: 532574.

Assar Lindbeck , and Mats Persson (2003) The gains from pension reform. Journal of Economic Literature, 41 (March): 74–112.

Juan Rojas (2005) Life-cycle earnings, cohort size effects and social security: a quantitative exploration. Journal of Public Economics, 89: 465485.

Paul Samuelson (1958) An exact consumption-loan model of interest with or without the social contrivance of money. Journal of Political Economy, 66: 467482.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Pension Economics & Finance
  • ISSN: 1474-7472
  • EISSN: 1475-3022
  • URL: /core/journals/journal-of-pension-economics-and-finance
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Full text views

Total number of HTML views: 1
Total number of PDF views: 11 *
Loading metrics...

Abstract views

Total abstract views: 72 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 21st September 2017. This data will be updated every 24 hours.