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Pensions, informality, and the emerging middle class

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  • Angel Melguizo

    (OECD Development Centre, France)

Abstract

A large share of the population in emerging market economies has no pension coverage, exposing them to the economic risks arising from socio-economic and individual shocks. This problem, which arises from having large informal (unregulated) sectors, affects not only poor workers, but as many as half the newly or nearly middle class in some emerging market economies. With very little social protection coverage today, these workers will also be vulnerable in the future unless tax, labor, and social policies change to encourage formalization. While formalization would require substantial resources in the short-term, it seems financially sustainable.

Suggested Citation

  • Angel Melguizo, 2015. "Pensions, informality, and the emerging middle class," IZA World of Labor, Institute of Labor Economics (IZA), pages 169-169, July.
    • Handle: RePEc:iza:izawol:journl:y:2015:n:169
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    References listed on IDEAS

    as
    1. Easterly, William, 2001. "The Middle Class Consensus and Economic Development," Journal of Economic Growth, Springer, vol. 6(4), pages 317-335, December.
    2. Luis J. Carranza & Angel Melguizo & David Tuesta, 2012. "Matching Contributions for Pensions in Colombia, Mexico, and Peru: Experiences and Prospects," Working Papers 1232, BBVA Bank, Economic Research Department.
    3. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1, March.
    4. Rafael Rofman & Ignacio Apella & Evelyn Vezza, 2015. "Beyond Contributory Pensions : Fourteen Experiences with Coverage Expansion in Latin America," World Bank Publications - Books, The World Bank Group, number 20602, December.
    5. Abhijit V. Banerjee & Esther Duflo, 2008. "What Is Middle Class about the Middle Classes around the World?," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 3-28, Spring.
    6. Mariano Bosch & Ángel Melguizo & Carmen Pagés, 2013. "Better Pensions, Better Jobs: Towards Universal Coverage in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 82359, February.
    7. James J. Heckman & Carmen Pagés, 2004. "Introduction to "Law and Employment: Lessons from Latin American and the Caribbean"," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 1-108, National Bureau of Economic Research, Inc.
    8. Nancy Birdsall, 2010. "The (Indispensable) Middle Class in Developing Countries; or, The Rich and the Rest, Not the Poor and the Rest," Working Papers 207, Center for Global Development.
    9. Ana Corbacho & Vicente Fretes Cibils & Eduardo Lora (ed.), 2013. "More than Revenue," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-31597-7.
    10. Francisco H.G. Ferreira & Julian Messina & Jamele Rigolini & Luis-Felipe López-Calva & Maria Ana Lugo & Renos Vakis, 2013. "Economic Mobility and the Rise of the Latin American Middle Class [La movilidad económica y el crecimiento de la clase media en América Latina]," World Bank Publications - Books, The World Bank Group, number 11858, December.
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    12. Bosch, Mariano & Melguizo, Ángel & Pagés, Carmen, 2013. "Better Pensions, Better Jobs: Towards Universal Coverage in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 462.
    13. Homi Kharas, 2010. "The Emerging Middle Class in Developing Countries," OECD Development Centre Working Papers 285, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Christian Daude & Nora Lustig & Angel Melguizo & Jose Ramon Perea, 2017. "On the middle 70%. The impact of fiscal policy on the emerging middle class in Latin America using Commitment to Equity," Working Papers 1716, Tulane University, Department of Economics.
    2. Margarita Velín-Fárez, 2021. "Population and Labor Dynamics in Large Informal Markets: Implications for Pension Systems with Evidence from Ecuador," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 15(2), April.

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    More about this item

    Keywords

    informality; pensions; incentives; middle class; Latin America;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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