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The purpose of this study is to provide broader understanding of the significant role that the pension system has in the Spanish economy by estimating the sectoral production, employment and income sustained by pensioners' consumption.

Based on input–output tables by the World Input–Output Database and consumption data from the Household Budget Survey by the Spanish Statistical Office, a demoeconomic model is applied to quantify the direct impacts, indirect impacts from interindustry links and induced impacts from income–consumption connections over a nine-year period (2006–2014). Then, the factors driving the evolution of total output, employment and value added during such period have been examined by using structural decomposition analysis.

The growing participation of consumption by pensioner households in final demand had proven crucial during the 2008 crisis to alleviate the negative trend in production and employment derived from the collapse in consumption suffered by the rest of households.

Determining the underlying factors driving changes in both employment and income during the 2008 crisis can be of interest in political decision-making on the sustainability of the Spanish pension system.

The results of estimating both the employment and income supported by pensioners' consumption reveal the significant stabilizing effect of the public spending on pensions, particularly during the 2008 crisis.

The current Spanish approach of attaining the pension system sustainability by merely reducing social protection costs ignores the adverse consequences of a lower pensioners' demand. This paper addresses an alternative view in which pension spending is not considered a burden on economic growth but rather a means of improving the level of production and employment.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2019-0047

This work analyzes the economic impact of an economic crisis on consumption in Spanish households, detecting inequalities in household consumption according to the age of the main breadwinner and changes in consumption patterns. In particular, the effects of the financial crisis of 2008 on household consumption are studied and divided according to the main breadwinner's age group to obtain the economic impact of the fall in consumption in young households.

The input–output tables of the Spanish economy during the years 2005 and 2015 and data on household consumption based on age group have been used. Economic impact is estimated through multisector modeling, specifically a demand model expressed in monetary terms. This model allows us to obtain the direct impact on the sectors offering the demanded services and the indirect impact due to increase in intermediate demand from these sectors on the rest of them.

The results obtained show the changes in household consumption and its effects on different productive sectors, highlighting the following sectors: real estate activities, electricity, gas, steam and air conditioning supply, accommodation and food service activities and manufacturing.

This study measures the impact of an economic crisis on the consumption of young households, analyzing all groups of households according to the main breadwinner's age, with the added value of studying the impact of this variation on household consumption and quantifying the positive and negative impact on the different sectors of activity of the Spanish economy.