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The Chilean pension reform: A model to follow?

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  • Cerda, Rodrigo A.

Abstract

One of the major economic reforms in the Chilean economy was the 1981 pension reform. In that year, Chile transformed its Pay-as-you-go social (PAYG) security system to an individual account social security system (IA). This paper discusses the impacts of the social security reform. To do so, we construct a countra-factual scenario of the Chilean economy under the PAYG system using simulations methods and we compare it with the effective data occurred under the IA system. We discuss the fiscal impacts, plus pension coverage on the elderly and the PAYG system's macroeconomics impacts by comparing them with the actual evolution of the Chilean economy under the IA system. Our simulations show significant fiscal deficits in the PAYG plus relatively lower pension coverage and modest benefits compare to the IA system. Finally, we show that the pension reform might have had significant macroeconomic impacts.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 30 (2008)
Issue (Month): 3 ()
Pages: 541-558

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Handle: RePEc:eee:jpolmo:v:30:y:2008:i:3:p:541-558

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Web page: http://www.elsevier.com/locate/inca/505735

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  16. Dominique Hachette, 1998. "Ahorro Privado en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 35(104), pages 3-48.
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Cited by:
  1. Cerda, Rodrigo A., 2008. "Social Security and Wealth Accumulation in Developing Economies: Evidence from the 1981 Chilean Reform," World Development, Elsevier, vol. 36(10), pages 2029-2044, October.
  2. Creedy, John & Guest, Ross, 2008. "Changes in the taxation of private pensions: Macroeconomic and welfare effects," Journal of Policy Modeling, Elsevier, Elsevier, vol. 30(5), pages 693-712.

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