Introducing an Austrian backpack in Spain

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• dc.contributor.author Brogueira de Sousa, João
• dc.contributor.author Díaz-Saavedra, Julián
• dc.contributor.author Marimon, Ramon
• dc.date.accessioned 2023-07-14T06:48:44Z
• dc.date.available 2023-07-14T06:48:44Z
• dc.date.issued 2022
• dc.description.abstract In an overlapping generations economy with incomplete insurance markets, the introduction of an employment fund—akin to the one introduced in Austria in 2003, also known as ‘Austrian backpack’—can enhance production efficiency and social welfare. It complements the two classical systems of public insurance: pay-as-you-go (PAYG) pensions and unemployment insurance (UI). We show this in a calibrated dynamic general equilibrium model with heterogeneous agents of the Spanish economy in 2018. A ‘backpack’ (BP) employment fund is an individual (across jobs) transferable fund, which earns a market interest rate as a return and is financed with a payroll tax (a BP tax). The worker can use the fund while unemployed or retired. Upon retirement, backpack savings can be converted into an (actuarially fair) retirement pension. To complement the existing PAYG pension and UI systems with a welfare maximizing 6% BP tax would raise welfare by 0.96% of average consumption at the new steady state, if we model Spain as an open economy. As a closed economy, there are important general equilibrium effects, and as a result, the social value of introducing the backpack is substantially greater: 16.14%, with a BP tax of 18%. In both economies, the annuity retirement option is an important component of the welfare gains.
• dc.description.sponsorship This research started as part of the ADEMU project, “A Dynamic Economic and Monetary Union”. ADEMU was funded by the European Union’s Horizon 2020 Programme under grant agreement N. 649396 (ADEMU).
• dc.format.mimetype application/pdf
• dc.identifier.citation Brogueira de Sousa J, Díaz-Saavedra J, Marimon R. Introducing an Austrian backpack in Spain. SERIEs. 2022;13(3):513-56. DOI: 10.1007/s13209-022-00263-x
• dc.identifier.doi http://dx.doi.org/10.1007/s13209-022-00263-x
• dc.identifier.issn 1869-4187
• dc.identifier.uri http://hdl.handle.net/10230/57575
• dc.language.iso eng
• dc.publisher Springer
• dc.relation.ispartof SERIEs. 2022;13(3):513-56.
• dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
• dc.rights © The Author(s) 2022. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by/4.0/
• dc.subject.keyword Computable general equilibrium
• dc.subject.keyword Welfare state
• dc.subject.keyword Social security reform
• dc.subject.keyword Retirement
• dc.title Introducing an Austrian backpack in Spain
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/publishedVersion