Introducing an Austrian backpack in Spain Brogueira de Sousa, João Díaz Saavedra, Julián Alberto Marimon, Ramón Computable general equilibrium Welfare state Social security reforms Retirement We would like to thank Javier Díaz-Giménez who has made this project possible, the editor and two referees for detailed comments that greatly improved the paper. This research started as part of the ADEMU project, “A Dynamic Economic and Monetary Union”. ADEMU was funded by the European Union’s Horizon 2020 Programme under grant agreement N. 649396 (ADEMU). In an overlapping generations economy with incomplete insurance markets, the introduction of an employment fund—akin to the one introduced in Austria in 2003, also known as ‘Austrian backpack’—can enhance production efficiency and social welfare. It complements the two classical systems of public insurance: pay-as-you-go (PAYG) pensions and unemployment insurance (UI).We showthis in a calibrated dynamic general equilibrium model with heterogeneous agents of the Spanish economy in 2018. A ‘backpack’ (BP) employment fund is an individual (across jobs) transferable fund, which earns a market interest rate as a return and is financed with a payroll tax (a BP tax). The worker can use the fund while unemployed or retired. Upon retirement, backpack savings can be converted into an (actuarially fair) retirement pension. To complement the existing PAYG pension and UI systems with a welfare maximizing 6% BP tax would raise welfare by 0.96% of average consumption at the new steady state, if we model Spain as an open economy. As a closed economy, there are important general equilibrium effects, and as a result, the social value of introducing the backpack is substantially greater: 16.14%, with a BP tax of 18%. In both economies, the annuity retirement option is an important component of the welfare gains. 2022-05-04T08:16:35Z 2022-05-04T08:16:35Z 2022-04-18 info:eu-repo/semantics/article Sousa, J.B.d., Díaz-Saavedra, J. & Marimon, R. Introducing an Austrian backpack in Spain. SERIEs (2022). [https://doi.org/10.1007/s13209-022-00263-x] http://hdl.handle.net/10481/74682 10.1007/s13209-022-00263-x eng info:eu-repo/grantAgreement/EC/H2020/649396 ADEMU http://creativecommons.org/licenses/by/3.0/es/ info:eu-repo/semantics/openAccess Atribución 3.0 España Springer Nature