Immigration and Social Security in Spain

FEDEA Working Paper No. 2009-26

42 Pages Posted: 7 Aug 2009

See all articles by Clara I. Gonzalez

Clara I. Gonzalez

Banco de España

J. Ignacio Conde-Ruiz

Foundation for Applied Economic Research (FEDEA)

Michele Boldrin

Washington University in St. Louis

Date Written: July 1, 2009

Abstract

The objective of this paper is to understand the impact of immigration on the Spanish pension system during the next fifty years by building a quantitative theoretical framework. In order to carry out the exercise of projection of revenues and expenditures in the Spanish pension system, we have developed an Overlapping Generation Model where individuals differ by age, gender, skill and nationality. The Cohort Component Population Projection Method is used for the demographic projections, and for the labor market scenario we have simulated the full labor history of all of our different workers for the period 2008-2050 taking into account the future evolution of the educational levels and five possible situations during their labor history (employed, self-employed, unemployed, disable and inactive).

In a first baseline scenario the system will be in deficit around year 2023 according to the last official estimations. The arrival of a large number of foreign workers is offering the Social Security System roughly five years of additional time to correct its important underlying unbalances. However after this period, the structural problems will come back and may be even magnified by the presence of an additional number of retired immigrants. Even if immigration reaches its total assimilation in the labor market it will not be sufficient to avoid that the pension system will be in deficit. However, immigration is allowing us to obtain very valuable additional time in order to carry out the necessary reforms.

Keywords: retirement pensions, Social Security pensions, immigration

JEL Classification: H55, J26

Suggested Citation

Gonzalez, Clara I. and Conde-Ruiz, J. Ignacio and Boldrin, Michele, Immigration and Social Security in Spain (July 1, 2009). FEDEA Working Paper No. 2009-26 . Available at SSRN: https://ssrn.com/abstract=1443319 or http://dx.doi.org/10.2139/ssrn.1443319

Clara I. Gonzalez (Contact Author)

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

J. Ignacio Conde-Ruiz

Foundation for Applied Economic Research (FEDEA) ( email )

Jorge Juan 46
Madrid, 28001
Spain
+34 91 435 9020 (Phone)
+34 91 577 9575 (Fax)

Michele Boldrin

Washington University in St. Louis ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
145
Abstract Views
1,114
rank
214,958
PlumX Metrics