Demographic change, pension reform and redistribution in Spain

Recent demographic changes have spurred pension reforms aimed at restoring the financial sustainability of PAYG systems. In Spain, the most significant reforms were undertaken in 1997 and in 2002, entailing an increase in the length of the averaging period in the pension formula, an increase in the penalties for early retirement and for retirement with short contributive records, a bonus for retirement after the age of 65, and a change in the eligibility conditions. In this paper we use an Applied General Equilibrium model populated by two-earners households to evaluate the redistributive impact of the pension system and the financial and welfare consequences of these reforms on households that differ in their education, region of residence and year of birth. The initial redistribution is assessed by comparing the internal rate of return provided to different households. We find that they vary considerable depending on education and cohort. Regarding the reforms, we find an increase in the implicit debt of the pension system after the reforms, and important changes in welfare. Households up to secondary education born between 1935 and 1975 are predicted to benefit from the reform, while the welfare of younger cohorts will be hit by higher taxes and unfavorable macroeconomic changes.Social Security, Pension Reform, Applied General Equilibrium, Redistribution

Movilidad de rentas y convergencia en Europa

Este artículo propone una forma de estudiar las disparidades entre regiones alternativas a las propuestas en la literatura hasta el momento. En primer lugar, se propone evaluar la desigualdad entre regiones utilizando la renta agregada de varios períodos en lugar de la renta de un sólo período. A lo largo del tiempo se pueden producir cambios en las posiciones relativas de las regiones que hagan que, aunque la desigualdad permanezca constante período tras período, la desigualdad de la renta agregada sea menor. En segundo lugar, se propone una forma de medir la contribución de cada período a la desigualdad que se observa en el agregado. Para ello se utiliza una extensión al caso de T períodos del índice de movilidad de la renta de Chackravarty, Dutta y Weymark (1985), originalmente propuesto para un mundo de sólo dos períodos. Finalmente, se realiza una aplicación empírica utilizando datos de las regiones europeas. La principal conclusión es que, al contrario de lo que se pudiera pensar, las asincronías en los ciclos económicos entre países o la presencia de shocks sectoriales que afectan de manera diferente a las regiones no son la causa de las disparidades anuales de renta entre regiones en Europa

MOVILIDAD DE RENTAS Y CONVERGENCIA EN EUROPA

Este artículo propone una forma de estudiar las disparidades entre regiones alternativa a las propuestas en la literatura hasta el momento. En primer lugar, se propone evaluar la desigualdad entre regiones utilizando la renta agregada de varios períodos en lugar de la renta de un sólo período. A lo largo del tiempo se pueden producir cambios en las posiciones relativas de las regiones que hagan que, aunque la desigualdad permanezca constante período tras período, la desigualdad de la renta agregada sea menor. En segundo lugar, se propone una forma de medir la contribución de cada período a la desigualdad que se observa en el agregado. Para ello se utiliza una extensión al caso de T períodos del índice de movilidad de la renta de Chackravarty, Dutta y Weymark (1985), originalmente propuesto para un mundo de sólo dos períodos. Finalmente, se realiza una aplicación empírica utilizando datos de las regiones europeas. La principal conclusión es que, al contrario de lo que se pudiera pensar, las asincronías en los ciclos económicos entre países o la presencia de shocks sectoriales que afectan de manera diferente a las regiones no son la causa de las disparidades anuales de renta entre regiones en Europa.

Demographic change, pension reform and redistribution in Spain.

Recent demographic changes have spurred pension reforms aimed at restoring the financial sustainability of PAYG systems. In Spain, the most significant reforms were undertaken in 1997 and in 2002, entailing an increase in the length of the averaging period in the pension formula, an increase in the penalties for early retirement and for retirement with short contributive records, a bonus for retirement after the age of 65, and a change in the eligibility conditions. In this paper we use an Applied General Equilibrium model populated by two-earners households to evaluate the redistributive impact of the pension system and the financial and welfare consequences of these reforms on households that differ in their education, region of residence and year of birth. The initial redistribution is assessed by comparing the internal rate of return provided to different households. We find that they vary considerable depending on education and cohort. Regarding the reforms, we find an increase in the implicit debt of the pension system after the reforms, and important changes in welfare. Households up to secondary education born between 1935 and 1975 are predicted to benefit from the reform, while the welfare of younger cohorts will be hit by higher taxes and unfavorable macroeconomic changes

Wage growth across fields of study among young college graduates: Is there a gender gap?

We use the Flexible Professional in the Knowledge Society data set to learn about gender gaps during the early career of college graduates in Europe. We document substantial heterogeneity across fields of education in the gender wage gap at the entrance to the labour market. We find that the gap evolves against women over the five years after graduation in Social Science and in Economics, Business, and Law. Finally, we estimate a significant female wage growth penalty after we control for observable characteristics only within the Economics, Business, and Law category. Within this field, we estimate a female annual wage growth penalty of 1.1 percentage points among individuals who remained childless and 2.5 percentage points among individuals who became parents. A small fraction of the wage growth gap disappears after we control for variables capturing individual differences in job mobility or in labour market attachment during the early careerFundación Ramón Areces (XIII Ayudas Investigación en Economía), Spanish Ministry of Science and Technology (Grant ECO2015-64l467-R, MINECO/FEDER) Spanish Government Projects PID2019-108079GBC22 and ECO2015-70331-C2-1-R and Comunidad de Madrid Project S2015/HUM-344

Labor force participation, wages and turbulence

Participation of middle aged men with upper secondary education or less has decreased over the last two decades in the US. This comes together with wage stagnation for this demographic group. In this paper we use a general equilibrium model of the labor market with frictions, participation decisions and endogenous accumulation of skills through a learning by doing technology in order to understand these facts. We quantitatively assess the implications of an increase in the probability of skills loss during non-employment spells (turbulence, after Ljungqvist and Sargent, 1998) and show that non-participation increases and wages of more experienced workers fall because with increased turbulence their outside option worsens

Natalidad e instituciones

La baja natalidad en España, en comparación con otros países de la OCDE, es un hecho bien conocido sobre cuyas causas, sin embargo, se tiene un conocimiento limitado. Como en otros países, la fecundidad se ha reducido de forma muy sustancial desde los años setenta, si bien en España, se sitúa en un nivel particularmente bajo desde hace al menos dos décadas. La revisión de la literatura económica que ha estudiado este fenómeno nos permite concluir que la inestabilidad laboral y el elevado desempleo, así como la falta de flexibilidad en la organización de la jornada laboral y un reducido gasto público en la primera infancia y en ayudas a las familias con hijos podrían ser factores importantes para explicarlo. Por su parte, se necesita más investigación para determinar la relevancia de otros aspectos tales como las dificultades de acceso a la vivienda y la desigual distribución de las tareas de cuidados de los hijos entre madres y padres. Con todo esto, cabe esperar que políticas que reduzcan la inestabilidad de las relaciones laborales, la incidencia del desempleo y los costes de la participación laboral de las familias con hijos, así como aquellas que favorezcan la adopción de jornadas laborales similares a las de otros países de Europa, puedan tener un impacto positivo sobre la natalidad en España.Fertility is low in Spain relative to other OECD countries. This is a well-known fact, however, we have a limited understanding of its drivers. As it happened in other countries, fertility dramatically decreased since the seventies, but in Spain the fertility rate reached a particular low level. Economic literature on this issue seems to support that labor market level of public expenditure on families with children and on pre-primary education may be important causes to account for the low fertility in Spain. More research is needed to din-sentangle the importance of the difficulties to access housing and of the unequal distribution of childcare between mothers and fathers within the household. Therefore, policies reducing labor market uncertainty, policies favoring work schedules similar to other European countries and policies reducing the costs of labor market participation for families with children can help to promote fertility in Spain

Gender gaps in Spain: policies and outcomes over the last three decades

We document recent trends in gender equality in employment and wages in Spain. Despite an impressive decline in the gender gap in employment, females are still less likely to work than males: about 76% of working age males and 63% of working age females were employed in 2010. If females work they are more likely to be employed part time and with temporary contracts. The large increase in female employment, from 28% in 1977 to 63% in 2010, was accompanied by a significant decline in fertility. The gender gap in wages, after controlling for worker and job characteristics as well as for selection, is high. It was about 20% in 2010, quite close to its value in 1994. Furthermore, the gender gap in wages is driven mainly by differences in returns to individual characteristics. While women are more qualified than men in observable labor market characteristics, they end up earning less. There have been several important policy changes that try to help families reconcile family responsibilities with market work. The existing literature suggests that households do react to incentives generated by different policies and policy changes are at least partly responsible for changes in female labor supply. In recent decades, the large inflow of immigrants, who provided relatively cheap household services, allowedmore educated women to enter the labor market. Policy challenges, however, remain.The authors thank RecerCaixa for support. Kaya acknowledges financial support from the Spanish Ministry of Science and Innovation through grant “Consolidated Group-C” ECO2008-04756 and FEDER. Sánchez-Marcos also thanks Spanish MCYT for Grant ECO2009-09614

Gender gaps in Spain: policies and outcomes over the last three decades

We document recent trends in gender equality in employment and wages in Spain. Despite an impressive decline in gender gap in employment, females are still less likely to work, and if they work they are more likely to be employed part time and with temporary contracts. The gender gap (after controlling for worker and job characteristics) is about 20% and did not change between 1995 and 2006. Furthermore, the gender gap in wages is driven mainly by differences in returns to individual characteristic. While women are more qualified than men in observable labor market characteristics, they end up earning less. Public policy seems to affect female employment. In particular, there was a significant acceleration of female employment in 2000s. This was a period in which many policies that were implemented after early 1990s started to have their longer term effects. It was also a period during which Spain received a large number of immigrants, which had a positive impact on female labor force participation