Do pensions foster education? An empirical perspective

The paper examines the effect of population ageing on public education spending. On the one hand, ageing is expected to have a negative effect on education, as an increasing number of retirees results in 'intergenerational conflict' and, hence, the condemnation of education expenditure. On the other hand, ageing, in combination with pay-as-you-go pension systems, offers incentives for the working-age generation to invest in the public education of the young in order to 'reap' the benefits (that is, higher income tax/contributions) of their greater future productivity. Empirical evidence derived from the application of a fixed effects approach to panel data for OECD countries shows that the increasing share of elderly people has a non-linear effect on education spending. This indicates a certain degree of intergenerational conflict. Nevertheless, we find that future population ageing, which reinforces the mechanism linking public education and pensions, reflects positively on education expenditure. Furthermore, by disaggregating total education expenditure by educational levels, we observe that this effect is led by levels of non-compulsory education, probably as a reflection of the direct connection to labor productivity

Do pensions foster education? An empirical perspective [WP]

In this paper we examine the effect of the demographic transition on public education, pension spending and the interaction between them. In particular, we investigate the theoretical prediction that the structure of PAYG pension systems, alongside population ageing, offers incentives for the working-age generation to invest in the public education of the young in order to "reap" the benefits of their higher productivity in the future, translated into higher income tax/contributions. The empirical evidence resulting from the application of the fixed effects approach to panel data for OECD countries shows that the increasing share of elderly people has non-linear effects on both retirement and education spending. The former suggests that political pressure to increase benefits turns out to have no effect when the ageing process is strong enough to compromise the fiscal budget and the latter indicates a certain degree of generational conflict. Nevertheless, our results suggest that a positive link arises when examining the connection between education and pensions by using the projected old dependency ratio. A more detailed analysis of total education expenditure shows that only the non-mandatory educational levels benefit from the future population ageing

Sustainability and adequacy of the Spanish pension system after the 2013 reform: a microsimulation analysis

Concerns about the consequences of demographic ageing on the sustainability of the pension system has led to the adoption of reforms reducing pension expenditure. However, the impact of these reforms on pension adequacy is now coming under increasing scrutiny. Taking recent Spanish reform as an example, this paper analyses the extent to which fostering pension sustainability threatens pension adequacy. Using an extension of the DyPeS behavioural microsimulation model, results show that the introduction of mechanisms linking retirement pensions to the evolution of the social security budget balance has strong and negative effects on adequacy. The gains in sustainability are mainly driven by the significant fall in the benefit ratio (average pension to average wage), worsening the relative economic position of pensioners throughout forthcoming decades, reversing the past trend

Sustainability and adequacy of the Spanish pension system after the 2013 reform: a microsimulation analysis [WP]

Concerns about the consequences of demographic ageing on the sustainability of the pension system has led to the adoption of reforms reducing pension expenditure. However, the impact of these reforms on pension adequacy is now coming under increasing scrutiny. Taking recent Spanish reform as an example, this paper analyses the extent to which fostering pension sustainability threatens pension adequacy. Using an extension of the DyPeS behavioural microsimulation model, results show that the introduction of mechanisms linking retirement pensions to the evolution of the social security budget balance has strong and negative effects on adequacy. The gains in sustainability are mainly driven by the significant fall in the benefit ratio (average pension to average wage), worsening the relative economic position of pensioners throughout forthcoming decades, reversing the past trend

The Impact of the Retirement Decision and Demographics on Pension Sustainability: A Dynamic Microsimulation Analysis

This paper investigates how retirement decisions, in interaction with demographic changes, impact on pension system sustainability. To do so, we introduce behaviour into a dynamic microsimulation model applied to the Spanish case. Specifically, the retirement decision is modelled using a reduced-form survival model that provides information on retirement hazards, which are then used to calculate times to retirement within the microsimulation model. This model allows us to account for behavioural responses. For example, the behavioural reaction to the 2011 reform improves pension system sustainability, despite individuals opting to retire later to obtain higher benefits. The positive effect (increase in contributions and reduction in time spent in retirement) is greater than the negative effect (increase in pension levels). Additionally, the model allows us to show how the positive effects of the education transition and higher rates of female and older worker participation contribute to reducing the negative impact of population ageing

Protecting the elderly and children in times of crisis: An analysis based on National Transfer Accounts

The welfare state has been shown to be a powerful, effective mechanism in the fight against poverty and social exclusion. Yet, it retains a surprising bias towards the elderly, as identified in more than one strand of the social sciences literature. We construct the National Transfer Accounts (NTA) for Spain before and after the Great Recession to determine how this bias might have shifted during the crisis (...

Pensions i transferències intergeneracionals

Els sistemes de transferències socials nascuts a Europa i consolidats al llarg del segle passat constitueixen, sense cap dubte, un dels grans assoliments socials de la història. Tot i que el seu desenvolupament no ha estat homogeni en tots els països, ni en nivell ni en la seva composició qualitativa, certament l'estat del benestar és un dels grans consensos de les societats europees. Es pot dir que descansa sobre quatre grans pilars que són l'educació, la sanitat, les pensions i un quart que englobaria un conjunt heterogeni d'altres prestacions socials amb diferent pes en funció del moment i del país que observem (entre d'altres s'inclouen les polítiques d'atenció a la dependència, de protecció davant l'atur, d'accés a una llar i de protecció a la família. (...

Las cuentas nacionales de transferencias: aplicaciones y resultados para España

El envejecimiento es uno de los mayores retos a los que se enfrentan las sociedades avanzadas en el futuro próximo. El cambio en la composición por edades de la población obliga a repensar muchas de las estructuras sociales instauradas a lo largo del último siglo en busca de un mayor bienestar, surgidas en condiciones demográficas bien diferentes. Afrontar este reto con garantías exige análisis rigurosos en el marco de la economía intergeneracional, para comprender cómo se relacionan económicamente las diferentes generaciones que conviven en cada momento. Las Cuentas Nacionales de Transferencias suponen un gran avance en la disponibilidad de datos para este tipo de análisis

Information and choice of residential care provider for older people: a comparative study in England, the Netherlands and Spain

This study compared how older people use quality information to choose residential care providers in England, the Netherlands and Spain (Catalonia). The availability of information varies between each country, from detailed inspection and survey information in the Netherlands, through to a lack of publicly available information in Catalonia. We used semi-structured interviews and group workshops with older people, families and professionals to compare experiences of the decision-making process and quality information, and also to explore what quality information might be used in the future. We found that most aspects of the decision-making experience and preferences for future indicators were similar across the three countries. The use of quality information was minimal across all three, even in England and the Netherlands where information was widely available. Differences arose mainly from factors with the supply of care. Older people were most interested in the subjective experiences of other residents and relatives, rather than 'hard' objective indicators of aspects such as clinical care. We find that the amount of publicly available quality information does not in itself influence the decisions or the decision-making processes of older people and their carers. To improve the quality of decisions, more effort needs to be taken to increase awareness and to communicate quality in more accessible ways, including significant support from professionals and better design of quality information

Working conditions and health: Evidence on inequalities in Spain

[spa] Esta tesis se ocupa de la relación entre incapacidad permanente y condiciones de trabajo. En los dos primeros capítulos se investiga cómo las condiciones de trabajo, junto con otras variables sociodemográficas, contribuyen a la discapacidad. Nos centramos en diferencias asociadas a la condición de inmigrante (primer capítulo) y por periodo o cohorte (segundo capítulo), mediante la comparación de sucesivas cohortes de jóvenes entre 25 y 34 años de edad. En el tercer capítulo tomamos la perspectiva opuesta y analizamos el efecto de la incapacidad permanente en la vida laboral del individuo. Los resultados del primer capítulo indican que la condición de migrante - con diferencias por región de origen - tiene efectos significativos en la discapacidad y la probabilidad de estar empleado en una ocupación de alto riesgo. A pesar de que las condiciones de trabajo de los inmigrantes son objetivamente peores, presentan menor probabilidad de quedar discapacitados que los nativos. Nuestros resultados también sugieren que no sólo los riesgos de accidente y enfermedad profesional, ampliamente reconocidos, se asocian con probabilidades elevadas de discapacidad. Los trabajos poco cualificados y la inestabilidad en el empleo también se asocian con un mayor riesgo de discapacidad. En el segundo capítulo se muestra que el impacto de la inestabilidad laboral es mayor entre las cohortes de jóvenes actuales, si se comparan con los jóvenes en los años 80. Por último, los resultados del tercer capítulo muestran que sólo cerca del 10 % de las personas con discapacidad siguen trabajando después de la aparición de ésta. La brecha salarial entre trabajadores con y sin discapacidad es importante y significativa, y cerca del 30% de esta diferencia se atribuiría a discriminación de las personas con discapacidad. Nuestros resultados apuntan a que los efectos de esta discriminación en el empleo de las personas con discapacidad serían importantes, en particular para los hombres. Los conjuntos de datos utilizados en los tres capítulos se han elaborado a partir de la Muestra Continua de Vidas Laborales (MCVL), un conjunto de datos administrativos que contiene las historias laborales de los trabajadores y pensionistas desde 2004 .[eng] This thesis is concerned with the relationship between disability and working conditions. In the first two chapters we investigate how past and current working conditions, in conjunction with other socio-demographic variables, contribute to disability. We focus on differences by migrant status (first chapter) and by period or cohort (second chapter) specifically, by comparing successive cohorts of young people aged 25 to 34. In the third chapter we take up the opposite perspective and we analyse the effect of permanent disability on the working life of the individual. The main result of the first chapter is that migrant status – with differences among regions of origin – significantly affects both disability and the probability of being employed in a high-risk occupation. In spite of immigrants’ working conditions being objectively worse, they exhibit lower probability of becoming disabled than natives because the impact of such conditions on disability is much smaller in their case. Our results also suggest that not only the risks of illness and injury, widely recognized, involve higher rates of disability. Unskilled labour and employment instability are also associated with increased risks of disability and its impact is greatest among later-born cohorts, as the second chapter reveals. Attending to differences by cohort, job insecurity has a significant and huge impact on disability for all birth cohorts. By contrast, the effect of temporary employment “per se” is controversial without considering other factors, like the changes in Employment Protection Legislation motivated by the labour market reforms of the last two decades. Finally, the results of the third chapter show that only 10% of disabled people remain in the labour market after the occurrence of the disability. The potential disincentives to employment are controversial. While it is true that higher disability pensions are associated with lower probabilities of employment, it is also observed that, in general, wages and income decreases as a result of a disability, being the decision of remaining out of the labour market not entirely attributable to the worker and his pension level. Conversely, it is plausible that the alleged disincentives to employment come too, and largely, from the labour market. The wage gap between workers with and without IP are high and significant, and only in part can be explained by differences in productivity, so that the unexplained difference could be attributed to discrimination in the labour market against people with disability. The data sets employed in the three chapters have been elaborated from the Continuous Sample of Working Lives, known as the MCVL in Spanish (from "Muestra Continua de Vidas Laborales"), a Spanish administrative data set containing work histories of workers and pensioners available since 2004