Parraga Rodriguez, Susana; (2018) Essays on the economic effects of pension-related policies. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

This thesis analyses the economic effects of changes in pension-related policies. Chapter 1 provides an overview. Chapter 2 estimates the impact of pension-related policies on household spending. The identification exploits the deviation in pensioner income and expenditure caused by the introduction of a new pension system during the 1980s and the 1990s in Spain and constructs a new narrative series of legislated pension changes. I find that increases in the average pension have a roughly one-for-one effect on pensioner spending. The strongest effects are on the wealthy pensioners, with associated high levels of expenditure, income, and real estate. Estimates for different categories of expenditure indicate that benefit increases trigger the consumption-rich to spend more on durables, while the consumption- and income-poor pensioners spend more on non-durables and necessities such as food. Chapter 3 compares the dynamic aggregate effects of exogenous shocks to two key components of public expenditure in the United States, government income transfers and government spending. In an SVAR framework, I instrument the structural shocks to public expenditure with exogenous measures of changes in federal spending constructing a new narrative variable of legislated increases in US social security benefits. I demonstrate that shocks to different types of public expenditure do not have the same macroeconomic impact. The estimated government spending multiplier is between 0 and 1, while increases in transfers generate a multiplier effect above 1. Chapter 4 focuses on the aggregate effects of changes in old-age pensions and for a sample of European Union countries. This chapter constructs another new measure of transfer shocks building on a dataset by public finance experts of the European System of Central Banks (ESCB). I find that increases in old-age pensions have a positive impact on aggregate expenditure components and employment consistent with a multiplier effect of between 0 and 1.

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