Assessing Pension Expenditure Determinants – the Case of Portugal

Maria Teresa Garcia () and André Fernando Rodrigues Rocha da Silva

No 2019/68, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: Pension expenditure is a concern for the sustainability of public finances in the European Union. Therefore, assessing pension expenditure determinants is crucial. This study aims to disentangle the impact of demographic and economic variables, such as ageing, productivity, and unemployment, on pension expenditure. Using Portuguese time-series data, from 1975 to 2014, statistical evidence was found of co-integration between unemployed people aged between 15 and 64 years old, apparent productivity of labour, the old-age dependence index and pension expenditure as a share of gross domestic product. The use of a vector error correction model, with impulse-response functions and variance decomposition, showed that ageing has an almost insignificant impact in the long-run, when compared with unemployment and productivity.

Keywords: pension expenditure; determinants; linear regression analysis (search for similar items in EconPapers)
JEL-codes: C32 C51 C52 H55 (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-age and nep-eec
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp0682019

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