The Fiscal Effects of Uncapping Social Security Contributions: Implications for Pension Reform in Spain

Authors

  • Ferran Elias University of Valencia
  • Marc Riudavets-Barcons University of Helsinki

DOI:

https://doi.org/10.7203/IREP.4.2.25834

Abstract

We estimate the fiscal effects of uncapping social security contributions in Spain. Such exercise is not straightforward because there is no public data available on wages above the maximum contribution level. Nevertheless, in 2019 a reform in- creased the ceiling by about 7% and partially unveiled the shape of the distribution for high-wage earners. We exploit this variation and measure that uncapping could increase social security revenue by 0.22% of GDP. We discuss the implications of this estimate for pension reform. Combined with an increase in contribution rates of 0.6 percentage points (Mecanismo de equidad intergeneracional) and a regularization of undocumented immigrants, the overall revenue raised could pay for 44% of the expected increase in pension expenditure by 2030.

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References

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Published

2022-12-29

How to Cite

Elias, F., & Riudavets-Barcons, M. (2022). The Fiscal Effects of Uncapping Social Security Contributions: Implications for Pension Reform in Spain. International Review of Economic Policy-Revista Internacional De Política Económica, 4(2), 1–19. https://doi.org/10.7203/IREP.4.2.25834
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Issue

Vol. 4 No. 2 (2022)

Section

Articles

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