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Effects of Future Pension Benefits on Pre-retirement Labor Supply: Evidence from Chile

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  • Oscar Becerra

Abstract

In this paper, I estimate the effect of future pension benefits on pre-retirement labor supply for a representative sample of Chilean workers. Using non-linear patterns in pension benefit formulas and a reform that changed non-contributory pensions, I estimate the effect of pension accrual and expected pension wealth on labor force and contributory-sector participation, labor earnings, and hours worked. I find that the effect is related to the impact of pension accrual on the probability to contribute to the pension system. The effect is heterogeneous, and is concentrated among middle-age workers, low-skilled workers, workers with no savings, and workers with higher financial literacy.

Suggested Citation

  • Oscar Becerra, 2018. "Effects of Future Pension Benefits on Pre-retirement Labor Supply: Evidence from Chile," Documentos CEDE 16965, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:016965
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    More about this item

    Keywords

    Labor supply; pension benefits; financial literacy.;
    All these keywords.

    JEL classification:

    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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