SOCIAL SECURITY AND ECONOMIC PERFORMANCE IN PORTUGAL: AFTER ALL THAT HAS BEEN SAID AND DONE HOW MUCH HAS ACTUALLY CHANGED?

Alfredo Marvao Pereira () and Jorge Miguel Andraz ()

No 81, Working Papers from Department of Economics, College of William and Mary

Abstract: This paper provides an empirical estimate of the macroeconomic effects of the Portuguese pay-as-you-go social security system based on data for the period 1970-2007 and on VAR estimates using GDP, the unit cost of labor, the unemployment rate, the savings rate and social security spending. The major findings are twofold. First, growing social security spending has had detrimental effects on all of the private sector variables under consideration suggesting the existence of sizable inefficiencies. Second, these inefficiencies persist despite the successive reforms that took place over the last two decades. As a corollary, these results highlight the need for structural reforms of the pay-as-you-go system thereby addressing the sources of inefficiencies in addition to dealing with its chronic sustainability problems.

Keywords: Social security; employment; saving; VAR; Portugal (search for similar items in EconPapers)
JEL-codes: C32 C51 C52 H55 (search for similar items in EconPapers)
Date: Written
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