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on Microeconomic European Issues |
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Issue of 2014‒06‒07
twenty-one papers chosen by Giuseppe Marotta University of Modena and Reggio Emilia |
| By: | Pedersen, Peder J. (Aarhus University); Schmidt, Torben Dall (University of Southern Denmark) |
| Abstract: | The literature on Happiness and Subjective Well-Being (SWB) has been dominated by studies of the impact from income and labour market status - and the impact on happiness from changes in these determinants. It seems obvious to expect an impact from non-economic factors as well. In the present paper we focus on the eventual impact on SWB from having children. The dominant result in the rather few studies until now is the finding of no – or even a negative – impact on subjective well being following birth of a child. We focus on the impact from having children using two very big panel data sets. The first is the European Community Household Panel (ECHP) with data collected over 8 annual waves from 1994 to 2001 in 15 EU member countries. Observations are available for up to 15 countries with big differences in fertility levels, child care institutions and labour force participation for married women. At the same time, the ECHP data contains a lot of relevant demographic and labour market background variables to be included in the econometric analyses of the SWB impact from children. The second data set is The German Socio Economic Panel (GSOEP). Like the ECHP, the GSOEP data contains many relevant background factors. This presents a unique opportunity to combine the cross country perspective in the ECHP data with the possibility presented by the GSOEP of following the impact from giving birth over a significantly longer period including approximately 11.000 households. |
| Keywords: | subjective well-being, life events, panel data |
| JEL: | D1 I31 J13 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8207&r=eur |
| By: | Alberto Montagnoli (Department of Economics, University of Sheffield, UK); Mirko Moro (Division of Economics, Stirling Management School, University of Stirling, UK) |
| Abstract: | We investigate whether banking crises affect individuals' subjective wellbeing (SWB) in eighteen European countries between 1980-2011. We address the potential endogeneity between banking crises and SWB by exploiting spatial and temporal differences in banking crises episodes. We find negative, robust, pronounced and highly persistent effects for events prior to 2007. The 2007-2008 crash lowered SWB in countries that had previously experienced a credit boom. Individuals living in regions hosting financial centres suffer bigger losses. Yet, the impact is similar across socio-demographic groups. These effects extend beyond changes in macroeconomic factors, wealth and fiscal policies: they are hidden psychological costs. |
| Keywords: | well-being; happiness; financial crises; banking crises; difference-in-differences; uncertainty |
| JEL: | D1 E44 G21 H0 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2014010&r=eur |
| By: | Semih Akçomak (TEKPOL, Science and Technology Policy Studies, Middle East Technical University); Hanna Müller-Zick (Maastricht University) |
| Abstract: | This paper investigates the effect of trust on innovation. In addition to generalised trust we use a range of other indicators that could measure trust and investigate which trust related variables could explain innovation in 20 European countries divided into 135 regions. We specifically look at causal, non-linear and spatial forces. Our findings indicate that only generalised trust and non-egoistic fairness have robust effects on innovation in Europe. Using historical data on the extent and existence of universities and an instrumental variable strategy we set up a causal relationship between trust and innovation. Even after controlling for causal, spatial and non-linear forces there is a significant direct impact of trust on innovation. |
| Keywords: | trust, social capital, innovation, EU |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:met:stpswp:1304&r=eur |
| By: | Daniel Nepelski (European Commission – JRC - IPTS); Giuditta de Prato (European Commission – JRC - IPTS) |
| Abstract: | The European ICT Poles of Excellence project aims to identify ICT R&D&I-related activities which are geographically concentrated and which demonstrate high performance in ICT innovative activities: the European ICT Poles of Excellence. It also aims to help map the dynamics of ICT-related innovation and economic geography in Europe, pointing to the presence and possibly the emergence of agglomerated and globally performing ICT activities. This policy brief offers a synthesis of the major findings of the EIPE study. It also provides some insights into the policy implications these findings indicate. The study found significant evidence to show that Europe hosts a small number of highly ICT intensive regions, i.e. EIPEs. Together they participate in a networked ecosystem made up of very strong hubs in the global ICT innovation system and a multifaceted periphery with local and global links. Despite the highly specific nature of each of these regions, including the European ICT Poles of Excellence, whose characteristics vary considerably, their identification and analysis offer some strong implications for policy. |
| Keywords: | ICT; information and communication technologies; innovation, R&D, ICT industry; region; Europe; Poles of Excellence; clusters; indicators; methods |
| JEL: | O32 O52 R12 R28 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc85408&r=eur |
| By: | Pascal Da Costa (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris); Bianka Shoai Tehrani (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris, ITESE - Institut de Technico-Economie des Systèmes Energétiques - CEA : DEN/ITESE) |
| Abstract: | The aim of the article is to understand how the drivers for investment decisions in the capacities of electricity production have evolved over time, from 1945 to the present day, in the specific context of Europe facing wars and conflicts, scientific and technological progress, strong political and academic developments. We study the electric investment decisions by comparing the history of the European electricity markets with the successively dominant economic theories in this field. Therefore, we highlight differences between rational behaviors, such as described by the theories, and actual behaviors of investors and governments. Thus the liberalization of electricity markets in the European Union, more than twenty-five years ago, parts of a rationalization prescribed by new economic theories. It is clear that liberalization is being discussed. First, it remains very heterogeneous, which complicates the goal of creating a large single market for electricity in the Union. Second, we see a recent re-centralization of energy policy in the European Union (EU), which takes the form of a new regulation mainly relating to climate and renewables. However, this re-regulation is different from centralized control experienced by all European electricity markets until the mid-1980s. |
| Keywords: | European Electricity Market, Electricity Investments, European Energy Market Liberalisation, Climatic issues, Renewables. |
| Date: | 2013–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00995799&r=eur |
| By: | Jochen Kluve; Sebastian Schmitz |
| Abstract: | Increasing mothers’ labor supply is a key policy challenge in many OECD countries. Germany recently introduced a generous parental benefit that allows for strong consumption smoothing after childbirth and, by taking into account opportunity costs of childbearing, incentivizes working women to become mothers and return to the labor force rapidly. Using a sharp regression discontinuity design, we estimate policy impacts for up to 5 years after childbirth and find significant and striking patterns. First, medium-run effects on mothers’ employment probability are positive, significant and large, for some subgroups ranging up to 10 per cent. The effects are driven by gains in part-time but not full-time employment. We also find significant increases in working hours. Second, the probability of job continuity rises significantly, i.e. mothers return to their pre-childbirth employer at higher rates. Third, employers reward this return to work by raising job quality significantly and substantially. We argue that the policy generated a profound change in social norms: the new parental benefit defines an “anchor”, i.e. a societally preferred point in time at which mothers return to work after childbirth. |
| Keywords: | Parental benefits; female labor supply; regression discontinuity |
| JEL: | H31 J13 J22 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0481&r=eur |
| By: | Alfonso R. Sánchez Martín (Department of Economics, Universidad Pablo de Olavide); Jose Ignacio García Pérez (Department of Economics, Universidad Pablo de Olavide); Sergi Jiménez Martín (Department of Economics, Universitat Pompeu Fabra) |
| Abstract: | In this paper, we explore the links between pension reform, early retirement, and the use of unemployment as an alternative pathway to retirement. We use a dynamic rational expectations model to analyze the search and retirement behaviour of employed and unemployed workers aged 50 or over. The model is calibrated to reproduce the main reemployment and retirement patterns observed between 2002 and 2008 in Spain. It is subsequently used to analyze the effects of the 2011 pension reform in Spain, characterized by two-year delays in both the early and the normal retirement ages. We ?nd that this reform generates large increases in labour supply and sizable cuts in pension costs, but these are achieved at the expense of very large welfare losses, especially among unemployed workers. As an alternative, we propose leaving the early retirement age unchanged, but penalizing the minimum pension (reducing its generosity in parallel to the cuts imposed on individual pension bene?ts, and making it more actuarially fair with age). This alternative reform strikes a better balance between individual welfare and labour supply stimulus. |
| Keywords: | Retirement; Unemployment; Incentives; Pension system; Early Retirement; Pension reform; Spain |
| JEL: | H55 J14 J26 J64 |
| Date: | 2014–06 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:14.04&r=eur |
| By: | Julia Bredtmann; Sebastian Otten; Christian Rulff |
| Abstract: | This paper investigates the responsiveness of women’s labor supply to their husband’s loss of employment – the so-called added worker effect. While previous empirical literature on this topic mainly concentrates on a single country, we take an explicit internationally comparative perspective and analyze whether the added worker effect varies across the European countries. |
| Keywords: | Added worker effect; labor supply; unemployment; cross-country analysis |
| JEL: | J22 J64 J82 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0484&r=eur |
| By: | Hallberg, Daniel (The Swedish Social Insurance Inspectorate (ISF)); Johansson, Per (IFAU - Institute for Evaluation of Labour Market and Education Policy); Josephson, Malin (the Swedish Social Insurance Inspectorate (ISF)) |
| Abstract: | This paper studies empirically the consequences of retirement on health. We make use of a targeted retirement offer to army employees 55 years of age or older. Before the offer was implemented in the Swedish defense, the normal retirement age was 60 years of age. Estimating the effect of the offer on individuals’ health within the age range 56-70, we find support for a reduction in both mortality and in inpatient care as a consequence of the early retirement offer. Increasing the mandatory retirement age may thus not only have positive government income effects but also negative effects on increasing government health care expenditures. |
| Keywords: | Health; mortality; inpatient care; retirement; health care; pensions; occupational pensions |
| JEL: | I18 J22 J26 |
| Date: | 2014–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2014_012&r=eur |
| By: | Serdar Türkeli (UNU-MERIT, Maastricht University) |
| Abstract: | In this paper, we re-construct the sphere of European Neighbourhood Policy (ENP) with respect to empirical evidence collected from Web of Science and systematically meta-analysed. This analysis provides us the dynamics of the ENP knowledge asset in terms of stock and flow in temporal, spatial (geographical), organisational and contextual dimensions. The same meta-analysis is applied to Quality of Local Governance (QoLG) and dynamics of the re-constructed sphere of Quality of Local Governance is analysed, with cross-comparison to the ENP sphere. The main result indicates the sphere of Environment, Energy and Ecology (EEE) form the main sectoral gateway between the ENP and QoLG in a multi-level (international, national, regional) setting. We constructed our conceptual framework based on these evidence bases that gathered from spheres of the ENP and QoLG with comparison to analysis of temporal evolution of governance studies, and checked for theoretical debates of Bureaucratic Planning, Public Choice Theory and Structuralist Critiques, which are shown that incomplete to grasp this emerging EEE sphere. Although promising, New Regionalism concept is discussed with the condition of those current or potentially future developmentalist tendencies in the European Neighbourhood with respect to triangulated tensions between economic, social and environmental development. We listed and concluded that technological and social innovation are the vital enablers to activate this EEE Bridge in the governance of a foursquare quality of life agenda, with enhanced information and finance-based intelligent instruments interactive between i) European Neighbourhood Policy, ii) Open Method of ‘’Neighbourhoods’’ Coordination, iii) Smart ‘’Cross-Continental Regions’’ Specialisation, and iv) European ‘’Adaptive, Synchronous’’ Strategic Energy Technology Plan (ASSET-Plan). |
| Keywords: | European Neighbourhood policy, governance, regional policy |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:met:stpswp:1302&r=eur |
| By: | Barbara Bre?ko (JRC/IPTS); Panagiotis Kampylis (JRC/IPTS); Yves Punie (JRC/IPTS) |
| Abstract: | Technologies for learning are considered as key enablers of educational innovation. However, their full potential is not being realised in formal education settings and major questions are being asked about the sustainability, systemic impact and mainstreaming of ICT-enabled learning innovations (ICT-ELI) in Europe. This report presents 60 recommendations for immediate strategies and actions to be undertaken by policy-makers at local, regional, national, and EU level to further develop and mainstream ICT-ELI with systemic impact, contributing to the modernisation of Education and Training systems in Europe. The recommendations were developed in the context of the 'Up scaling Creative Classrooms in Europe (SCALE CCR) project, carried out by JRC-IPTS on behalf of the European Commission, DG Education and Culture, based on desk research; case reports from Europe and Asia; continuous stakeholders consultations; and in-depth expert interviews. The final set of recommendations was further validated and prioritised through an online consultation with 149 educational stakeholders. The recommendations were clustered into seven areas presenting a holistic agenda to guide the further development and mainstreaming of ICT-ELI: Content and Curricula; Assessment; School Staff Professional Development; Research; Organisation and Leadership; Connectedness; and Infrastructure. The number and variety of the recommendations provided depict the complexity of ICT-ELI and the systemic approach needed for their mainstreaming across Education and Training systems in Europe. |
| Keywords: | ICT-enabled innovation for learning, Creative Classrooms, conditions for sustainability and scalability of educational innovation, recommendations for policy actions |
| JEL: | I20 I21 I28 I29 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc83502&r=eur |
| By: | Anna Pechan (University of Oldenburg, Department of Economics) |
| Abstract: | Climate change poses a new challenge in particular to long-lasting electricity networks. At the same time, this industry is highly regulated, which greatly affects the behavior of network operators. In this paper, the impact of regulation in general and of the German electricity grid regulation in particular on anticipatory adaptation investments is analyzed. The qualitative analysis shows that in general a whole set of elements of the regulatory model and their coordination influence the decision of ex ante adaptation to climate change. A careful and balanced design, e.g. of efficiency and quality measurement, is thus crucial to avoid inadequate adaptation. The regulation in Germany discourages flexible adaptation to extreme weather events (EWEs). For irreversible adaptation of new and existing infrastructure to EWEs, the incentives highly depend on the cost approval of the regulator. Currently, the regulation discourages this type of adaptation. But if the additional costs can be claimed, the network operator is indifferent to adapt. Similarly, incentives to irreversibly adapt existing and new infrastructure to slow onset events (SOEs) range between excessively high and undistorted depending on the regulator’s discretion. Undistorted means that the decision to implement adaptation measures is not biased by regulation. Undistorted are also the incentives for flexible measures to adapt to SOEs. Only in the undistorted cases, the risk of inadequate adaptation are borne by the network operator. |
| Keywords: | Electricity Networks, Regulation, Climate Change, Germany |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:old:dpaper:365&r=eur |
| By: | Michael Fritsch (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Florian Noseleit; Yvonne Schindele |
| Abstract: | We investigate the role of industry and region-specific conditions for the survival of new businesses in innovative and in other manufacturing industries. The data comprises all German manufacturing start-ups of the 1992 to 2005 period. In contrast to studies for some other countries, we find that businesses in innovative industries have higher survival rates than businesses in other manufacturing industries. Moreover, the chances of survival for innovative industries are rather immune to changes, regarding regional and industry-specific conditions, whereas businesses in the other manufacturing industries are strongly affected. These findings highlight that resistance to adverse conditions is dependent on industry specific opportunities and technological conditions. |
| Keywords: | New business survival, hazard rates, duration analysis, entrepreneurship, location |
| JEL: | C41 L25 L26 L60 |
| Date: | 2014–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2014-017&r=eur |
| By: | Bianka Shoai Tehrani (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris, ITESE - Institut de Technico-Economie des Systèmes Energétiques - CEA : DEN/ITESE); Pascal Da Costa (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris); Danièle Attias (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris) |
| Abstract: | While nuclear power may experience a technological breakthrough in Europe with Generation IV nuclear reactors within a few decades (2040), several events and drivers could question this possibility: as the Fukushima accident, the climate issues and the electricity market liberalization. This paper analyzes how the necessary conditions for their industrial development from now up to 2040 can be either favorable or detrimental to future nuclear reactors compared with other technologies and according to four main investment drivers: 1) technical change, 2) policy, 3) market and 4) power company drivers. Twenty-four scenarios have been identified through structural analysis, with only three proving to be favorable to the development of future nuclear reactors. |
| Keywords: | Power System Economics; Electricity Investments; Nuclear Energies |
| Date: | 2014–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00997005&r=eur |
| By: | Salverda, Wiemer (University of Amsterdam); Checchi, Daniele (University of Milan) |
| Abstract: | Considering the contribution of the distribution of individual wages and earnings to that of household incomes we find two separate literatures that should be brought together, and bring 'new institutions' into play. Growing female employment, rising dual-earnership and part-time employment underline its relevance. We discuss the measurement of wage inequality, data sources, and stylized facts of wage dispersion for rich countries. The literature explaining the dispersion of wage rates and the role of institutions is evaluated, from the early 1980s to the recent literature on job polarization and tasks as well as on the minimum wage. Distinguishing between supply-and-demand approaches and institutional ones, we find the former challenged by the empirical measurement of technological change and a risk of ad hoc additions, without realizing their institutional preconditions. The institutional approach faces an abundance of institutions without a clear conceptual delineation of institutions and their interactions. Empirical cross-country analysis of the correlation between institutional measures and wage inequality incorporates unemployment and working hours dynamics, discussing the problems of matching individuals to their relevant institutional framework. Minimum wage legislation and active labour market policies come out negatively correlated to earnings inequality in US and EU countries. |
| Keywords: | labour-market institutions, household labour supply, hourly wages, hours worked, annual earnings, dispersion, inequality measures, household incomes, minimum wage, unions, employment protection |
| JEL: | D02 D13 D31 J22 J31 J51 J52 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8220&r=eur |
| By: | Elinder, Mikael (Uppsala Center for Fiscal Studies); Persson, Lovisa (Uppsala Center for Fiscal Studies) |
| Abstract: | In 2008, the Swedish property tax was reformed and a cap on yearly tax liabilities was introduced. A large fraction of owner occupied houses was subject to a substantial decrease in the tax. When the reform was announced, most analysts projected - in line with tax capitalization theory - that the tax decrease would lead to significant increases in house prices. We estimate price responses and capitalization degrees, using various DID strategies, in which the price dynamics of houses that were subject to a generous tax reduction are compared to the price dynamics of houses with a more modest reduction. Our results are largely inconsistent with capitalization theory. For the majority of properties, we find no evidence that the tax cut led to increases in house prices. However, we nd evidence of partial capitalization in sub-markets with highly valued properties, highly educated citizens and were it is especially dicult to increase supply. We argue that theories of bounded rationality can help explain why house buyers may fail to take a tax decrease into account in the valuation of houses. |
| Keywords: | announcement effects; capitalization; financial literacy; housing market; inattention; saliency |
| JEL: | D01 D03 D04 D12 H22 H24 R21 R38 |
| Date: | 2014–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2014_006&r=eur |
| By: | Antonio Di Paolo (Faculty of Economics, University of Barcelona); Anna Matas (GEAP, Universitat Autònoma de Barcelona); Josep Lluís Raymond (GEAP, Universitat Autònoma de Barcelona) |
| Abstract: | This paper analyses the effect of job accessibility by public and private transport on labour market outcomes in the metropolitan area of Barcelona. Beyond employment, we consider the effect of job accessibility on job-education mismatch, which represents a relevant aspect of job quality. We adopt a recursive system of equations that models car availability, employment and mismatch. Public transport accessibility appears as an exogenous variable in the three equations. Even though it may reflect endogenous residential sorting, falsification proofs suggest that the estimated effect of public transport accessibility is not entirely driven by the endogenous nature of residential decisions. |
| Keywords: | employment, job-education mismatch, job accessibility, public transport, Barcelona JEL classification: J61, J21, O18, P25, R41 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201419&r=eur |
| By: | Antonescu, Daniela (Romanian Academy, National Institute of Economic Research) |
| Abstract: | The general objective of this study is to evaluate regional disparities and the territorial convergence under the impact of the cohesion policy, in the context of the European Union integration. The specific objectives on which the research included in this work focused are the following: specific objectives: (i) analysis and interpretation of main theories of regional science, evolution and influence factors, main representatives; (ii) analysis of regional disparities in Romania in different fields of activity; (iii) analysis of convergence at regional level within the European Union; (iv) assessing the impact of implementing regional policy in Romania; and (v) suggestions regarding a possible model of regional strategy for the future programming period, from the perspective of the Europe 2020 Strategy. The study contains certain quantitative and qualitative estimates on the economic effects generated by Structural Funds at regional level in Romania. The data and information presented in the research paper regarding the gross impact of allocated resources are verified by computing first an average level of obtained effects. By using currently existing qualitative and quantitative data and some analysis techniques of territorial convergence recognised at international level, the study presents the trends at regional and local level in certain fields of activity. |
| Keywords: | regional convergence, economic and social cohesion, regional programmes and policies, territorial disparities, evaluation |
| JEL: | R11 R12 F02 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:ror:wpince:131209&r=eur |
| By: | Spermann, Alexander (IZA) |
| Abstract: | Lifelong learning represents a key response to the demographic challenge in Germany. In terms of professional success, not only hard skills but also soft skills hold importance. Indeed, the OECD competence tests PISA and PIAAC have come to the fore, although acquired skills are still relevant. Given the increasing skills shortages and the reduced half-life of qualifications, training continues to gain importance, including in the context of employer branding and companies’ corporate social responsibility activities. However, there is no linking of skills acquired through training with the automatic acquisition of qualifications. In this respect, online portals involving competency tests for young and old in connection with major credit points could play an important role. |
| Keywords: | demography, lifelong learning, competencies, hard skills, soft skills |
| JEL: | D83 I23 J11 J14 R20 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp83&r=eur |
| By: | Beuchert, Louise Voldby (Aarhus University); Humlum, Maria Knoth (Aarhus University); Vejlin, Rune Majlund (Aarhus University) |
| Abstract: | We study the relationship between the length of maternity leave and the physical and psychological health of the family. Using a reform of the parental leave scheme in Denmark that increased the number of weeks of leave with full benefit compensation, we estimate the effect of the length of maternity leave on a range of health indicators including the number of hospital admissions for both mother and child and the probability of the mother receiving antidepressants. The reform led to an increase in average post-birth maternity leave of 32 days. We find limited evidence that the increase in the length of maternity leave matters for child or maternal health outcomes and thus we complement the existing evidence on maternity leave expansions that tends to find limited effects on children's later developmental, educational, and labor market outcomes. Our results suggest that any beneficial effects of increasing the length of maternity leave are greater for low-resource families. |
| Keywords: | maternity leave, family health, regression-discontinuity |
| JEL: | I18 J13 J18 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8206&r=eur |
| By: | Javier Diaz Gimenez (IESE Business School); Julian Diaz Saavedra (Department of Economic Theory and Economic History, University of Granada.) |
| Abstract: | We use an overlapping generations model economy with endogenous retirement to study the 2011 and 2013 reforms of the Spanish public pension system. We nd that this latest reforms, which extend the number of years os contributions used to compute the pensions, delay the retirement ages, introduce two sustainability factors, and eectively transform the Spanish pay-as-yougo system into a dened-contribution system, succeed in making Spanish pensions sustainable until 2037, but they fail to do so afterwards. The success until 2037 is achieved reducing the real value of the average pension and leaving the many loopholes of the contributivity and the transparency of the system unchanged. This reduction in pensions is progressive and, by 2037, the average pension will be approximately 20 percent smaller in real terms than what it would have been under the pension rules prevailing in 2010. The 2013 pension reform fails after 2037 because, from that year onwards, approximately 50 percent of the Spanish retirees will be paid the minimum pension, which is exempt from the sustainability factors. We conjecture that further reforms lurk in the future of Spanish pensions. |
| Keywords: | Computable general equilibrium, social security reform, retirement. |
| JEL: | C68 H55 J26 |
| Date: | 2014–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:14/03&r=eur |