Pension expenditures and old-age poverty in OECD countries
Using data from 37 OECD countries during the 1980–2020 period, this paper seeks to quantify the potential role and impacts of pension expenditures for reducing old-age poverty (66–75 and 76-and-over age groups). To that end, we applied panel data techniques controlling for key macroeconomic and demo...
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AIMS Press
2025-01-01
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| Series: | National Accounting Review |
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| Online Access: | https://www.aimspress.com/article/doi/10.3934/NAR.2025002 |
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| author | María del Carmen Ramos-Herrera Simón Sosvilla-Rivero |
| author_facet | María del Carmen Ramos-Herrera Simón Sosvilla-Rivero |
| author_sort | María del Carmen Ramos-Herrera |
| collection | DOAJ |
| description | Using data from 37 OECD countries during the 1980–2020 period, this paper seeks to quantify the potential role and impacts of pension expenditures for reducing old-age poverty (66–75 and 76-and-over age groups). To that end, we applied panel data techniques controlling for key macroeconomic and demographic variables. Our results suggest that pension expenditure shows a linear and nonlinear impact on old-age poverty rates. The estimated elasticities increase (in absolute value) with the ratio of public pension expenditure to GDP, being higher (in absolute value) for the 76-and-over than for the 66–75 age group, suggesting a larger impact of pension expenditure on poverty for the oldest population group. When evaluating how each explanatory variable explains the poverty rates, we found that the macroeconomic situation is the main driver of its reduction, followed by public pension expenditure. Applying the panel dynamic threshold model, we also endogenously identified a common threshold of 7.21 in the ratio of public pension expenditures to GDP in the relationship between this variable and the poverty rate of both age groups. These results hold across various sensitivity analyses testing for structural breaks and heterogeneous relationships in the baseline empirical model and for the possibility of multiple thresholds in the threshold model. Our findings have significant implications for policymakers and researchers interested in social welfare and economic policy, providing evidence supporting the role of pension expenditures in reducing poverty among the elderly. |
| format | Article |
| id | doaj-art-febe48be088d4ec181b92f796b3b0b8e |
| institution | Kabale University |
| issn | 2689-3010 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | AIMS Press |
| record_format | Article |
| series | National Accounting Review |
| spelling | doaj-art-febe48be088d4ec181b92f796b3b0b8e2025-08-20T03:48:27ZengAIMS PressNational Accounting Review2689-30102025-01-0171285810.3934/NAR.2025002Pension expenditures and old-age poverty in OECD countriesMaría del Carmen Ramos-Herrera0Simón Sosvilla-Rivero1Department of Economics. University of Alcalá. 28801, Alcalá de Henares, SpainComplutense Institute for Economic Analysis (ICAE). Complutense University of Madrid. Campus de Somosaguas, 28223, Madrid. SpainUsing data from 37 OECD countries during the 1980–2020 period, this paper seeks to quantify the potential role and impacts of pension expenditures for reducing old-age poverty (66–75 and 76-and-over age groups). To that end, we applied panel data techniques controlling for key macroeconomic and demographic variables. Our results suggest that pension expenditure shows a linear and nonlinear impact on old-age poverty rates. The estimated elasticities increase (in absolute value) with the ratio of public pension expenditure to GDP, being higher (in absolute value) for the 76-and-over than for the 66–75 age group, suggesting a larger impact of pension expenditure on poverty for the oldest population group. When evaluating how each explanatory variable explains the poverty rates, we found that the macroeconomic situation is the main driver of its reduction, followed by public pension expenditure. Applying the panel dynamic threshold model, we also endogenously identified a common threshold of 7.21 in the ratio of public pension expenditures to GDP in the relationship between this variable and the poverty rate of both age groups. These results hold across various sensitivity analyses testing for structural breaks and heterogeneous relationships in the baseline empirical model and for the possibility of multiple thresholds in the threshold model. Our findings have significant implications for policymakers and researchers interested in social welfare and economic policy, providing evidence supporting the role of pension expenditures in reducing poverty among the elderly.https://www.aimspress.com/article/doi/10.3934/NAR.2025002pension expenditurespovertypopulation agingpanel threshold modelsoecd countries |
| spellingShingle | María del Carmen Ramos-Herrera Simón Sosvilla-Rivero Pension expenditures and old-age poverty in OECD countries National Accounting Review pension expenditures poverty population aging panel threshold models oecd countries |
| title | Pension expenditures and old-age poverty in OECD countries |
| title_full | Pension expenditures and old-age poverty in OECD countries |
| title_fullStr | Pension expenditures and old-age poverty in OECD countries |
| title_full_unstemmed | Pension expenditures and old-age poverty in OECD countries |
| title_short | Pension expenditures and old-age poverty in OECD countries |
| title_sort | pension expenditures and old age poverty in oecd countries |
| topic | pension expenditures poverty population aging panel threshold models oecd countries |
| url | https://www.aimspress.com/article/doi/10.3934/NAR.2025002 |
| work_keys_str_mv | AT mariadelcarmenramosherrera pensionexpendituresandoldagepovertyinoecdcountries AT simonsosvillarivero pensionexpendituresandoldagepovertyinoecdcountries |