Jennifer Alonso-García and Beatriz Rosado-Cebrián
The recent global financial crisis has intensified the public debate on the sustainability of pay-as-you-go pension schemes. The economic risk is expanding the effects of the already existent demographic risk in most European countries. Our objective is to analyse the effect of the alarming unemployment and inactivity patterns in Spain as of 2016 on the income from contributions and pension expenditures with respect to the GDP by using the Aggregate Accounting framework.
We analyse the pension expenditures for the current pattern as well as for full employment and conclude that while the economic risk outweighs the demographic risk until 2040, the main driver of expenditures lies in the ratio of pensioners to working age population in the long run.
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