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Welfare, inequality and financial consequences of a multi-pillar pension system. A reform in Peru

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  • Javier OLIVERA

Abstract

The distributional impact of the structural pension reform in Latin American countries has been largely absent in the economic debate. However, this reform may widen inequality in old-age and reduce welfare. In this paper we study the consequences of implementing a multi-pillar system in one of these countries. We take advantage of available administrative records for Peruvian workers to estimate inequality in pensions, pension debt and welfare. Overall, our results show that the pension debt and inequality can be substantially reduced without welfare losses. Thus, the proposed multi-pillar system allows recovering the principle of solidarity and saves fiscal resources.

Suggested Citation

  • Javier OLIVERA, 2009. "Welfare, inequality and financial consequences of a multi-pillar pension system. A reform in Peru," Working Papers of Department of Economics, Leuven ces09.11, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:ces09.11
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    References listed on IDEAS

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    1. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    2. Leonardo Gasparini & Guillermo Cruces & Leopoldo Tornarolli & Mariana Marchionni, 2009. "A Turning Point? Recent Developments on Inequality in Latin America and the Caribbean," CEDLAS, Working Papers 0081, CEDLAS, Universidad Nacional de La Plata.
    3. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    4. Alberto Arenas de Mesa & David Bravo & Jere R. Behrman & Olivia S. Mitchell & Petra E. Todd, 2006. "The Chilean Pension Reform Turns 25: Lessons From the Social Protection Survey," NBER Working Papers 12401, National Bureau of Economic Research, Inc.
    5. Nicholas Barr & Peter Diamond, 2009. "Reforming pensions: Principles, analytical errors and policy directions," International Social Security Review, John Wiley & Sons, vol. 62(2), pages 5-29, April.
    6. World Bank, 2004. "Peru : Restoring the Multiple Pillars of Old Age Income Security," World Bank Publications - Reports 14681, The World Bank Group.
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    Cited by:

    1. Martin Stepanek, 2017. "Pension Reforms and Adverse Demographics: The Case of the Czech Republic," Working Papers IES 2017/15, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2017.

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    More about this item

    Keywords

    Pension reform; pension inequality; social security; Latin America; Peru.;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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