Social Security and Retirement in Spain

Michele Boldrin, Sergi Jimenez-Martni and Franco Peracchi
Authors registered in the RePEc Author Service: Sergi Jimenez-Martin

No 6136, NBER Working Papers from National Bureau of Economic Research, Inc

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.

Date: 1997-08
Note: AG PE
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Citations: View citations in EconPapers (42)

Published as Social Security and Retirement in Spain , Michele Boldrin, Sergi Jimenez-Martin, Franco Peracchi. in Social Security and Retirement around the World , Gruber and Wise. 1999

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Chapter: Social Security and Retirement in Spain (1999)
Working Paper: Social security and retirement in Spain (1997)
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