Introducing individual savings accounts for severance pay in Spain
An ex-ante assessment of the distributional effects
This report provides an ex ante assessment of the distributional effects of introducing
portable severance pay accounts in Spain based on micro-simulations. In the current
system, permanent workers who are dismissed from their job are entitled to 20 days
of severance pay per year of service, which is relatively high by OECD standards.
The report considers a reform that replaces the current severance payment system with
individual saving accounts financed through periodic contributions by employers. The
report focuses on two versions of the reform that keep constant respectively the total
compensation in case of dismissal (“constant benefit”) or the expected costs for firms
of employing a permanent worker (“constant-cost”). Importantly, the analysis in the
report does do not take account of the behavioural responses of firms and workers
to the reform.
Published on March 17, 2021
In series:OECD Social, Employment and Migration Working Papersview more titles