The role of pensions in determining income inequality in Portugal

• Autor(a) principal: Valério, Beatriz de Almeida
• Data de Publicação: 2021
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/35542
• topic: Individual distribution of equivalent income; Income inequality; Pensions; Mean log deviation; Theil index; Decomposition; Population subgroups; Rendimento disponível por adulto equivalente; Desigualdade de rendimentos; Pensões; Índice Theil; Decomposição; Subgrupos de população; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This dissertation aims to study the role of Pensions in determining Income Inequality in Portugal. To do so, data on income and living conditions of the Portuguese households were analyzed using the ICOR (Inquérito às Condições de Vida e Rendimento) datasets. The methodology used follows the same procedure as Brewer, Muriel, & Wren-Lewis (2009). The decomposition by income source allowed to conclude that, between 2004 and 2019, the increase in pensions contribution to income inequality was accompanied by the increase in the weight of pensions in the total income of the Portuguese families. Considering the upward trend in the number of people with 65 years old and above in Portugal, we can expect an increase in the pensions contribution to total income inequality, if the pension system remains unaltered. The decomposition by population subgroups allowed to conclude that, between 2004 and 2019, although the share of the subgroup that had an old-age pension as the main income source increased, the inequality within that same subgroup decreased. Furthermore, the majority of the decrease in total inequality is explained by the decrease in inequality within the subgroup, rather than between the different subgroups. Pensions contribute to inequality but to a lesser extent than that of the labor income they replace, which is due not only to non-contributory pensions but also to partially redistributive pension formation rules.