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Social Security and Retirement in Spain

81 Pages Posted: 18 Jul 2000  

Michele Boldrin

University of Minnesota - Twin Cities - Department of Economics; Universidad Carlos III de Madrid - Department of Economics; Centre for Economic Policy Research (CEPR)

Sergi Jimenez-Martin

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Franco Peracchi

University of Rome, Tor Vergata - Centre for International Studies on Economic Growth (CEIS); EIEF

Date Written: August 1997

Abstract

We describe the historical evolution of the Spanish Social Security system and its current organization. Our attention concentrates on the main public pension scheme for private employees in the manufacturing and service sector (RGSS) which covers by far the largest majority of Spanish workers. After describing the way in which pension and retirement decisions are regulated by this system, we try to compute the incentives to early retirement it provides to different kinds of individuals. We show that the Spanish SS legislation generates strong incentives to retire early and that Spanish workers tend to do so. In particular, our findings support the idea that pensions-induced incentives matter for the labor supply behavior of" Spanish workers. While the Spanish system does not pay a particularly generous average pension relative to GDP per-capita, its generosity' concentrates on providing large minimum pensions to individuals with below average working histories and/or low wages. At the same time, the pension system provides workers earning average or above average salaries and with complete working histories with relatively weak financial gains from not retiring after the age of 60. The combination of these features of the Spanish legislation seems to account well for the observed increase in the percentage of early retirees among Spanish pensioners during the nineties.

Suggested Citation

Boldrin, Michele and Jimenez-Martin, Sergi and Peracchi, Franco, Social Security and Retirement in Spain (August 1997). NBER Working Paper No. w6136. Available at SSRN: https://ssrn.com/abstract=225900

Michele Boldrin

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States
612-624-4551 (Phone)
612-624-0209 (Fax)

Universidad Carlos III de Madrid - Department of Economics

Calle Madrid 126
Getafe, 28903
Spain

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Sergi Jimenez-Martin (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34) 93 542 16 67 (Phone)
(34) 93 542 17 46 (Fax)

Franco Peracchi

University of Rome, Tor Vergata - Centre for International Studies on Economic Growth (CEIS) ( email )

Via Columbia, 2
Rome, I-00133
Italy

EIEF ( email )

via Sallustiana 62
Rome, 00187
Italy

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