The Chilean Pension Reform: A Pioneering Program
AbstractIn the mid-1970s Chile initiated a deep market-oriented reform program aimed at opening up the economy, privatizing state owned enterprises and stabilizing the macroeconomy. In the 1980s Chile began to grow at increasingly rapid rates -- between 1986 and 1995 the average rate of growth bordered 7% --, becoming a star performer. Perhaps one of the most admired aspects of the Chilean program has been the reform of the pension system, which replaced an inefficient pay-as-you-go system with a privately administered defined contribution one. " This reform has been credited with helping develop Chile's capital market, with reducing government contingent liabilities and with helping boost Chile's traditionally anemic savings rate. The purpose of this paper is to analyze the most salient aspects of the Chilean program and to evaluate its achievements to date. The paper provides a brief background of the Chilean reforms effort and deals with Chile's old pay-as-you-go system, including its degree of (in)efficiency, its distributive characteristics and its fiscal consequences. The functioning of the new privately managed system is discussed in detail, and the system's results up to date are evaluated. I also discuss transitional issues, including the fiscal consequences of the reforms. Finally, the analysis also deals with the reforms effects on labor markets and savings.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5811.
Date of creation: Nov 1996
Date of revision:
Publication status: published as The Chilean Pension Reform: A Pioneering Program , Sebastian Edwards. in Privatizing Social Security , Feldstein. 1998
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
- José Pablo Arellano, 1982. "Efectos Macroeconómicos de la Reforma Previsional Chilena," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 19(56), pages 111-122.
- Salvador Valdés & Peter Diamond, . "Social Security Reforms in Chile," Documentos de Trabajo 161, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Morande, Felipe G., 1998.
"Savings in Chile. What went right?,"
Journal of Development Economics,
Elsevier, vol. 57(1), pages 201-228, October.
- Salvador Valdés, 1994. "Cargos por Administración en los Sistemas de Pensiones de Chile, los Estados Unidos, Malasia y Zambia," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 31(93), pages 185-228.
- Rodrigo Cifuentes, 1995. "Reforma de los Sistemas Previsionales: Aspectos Macroeconómicos," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 32(96), pages 217-250.
- McGreevey, W., 1990. "Social security in Latin America: issues and options for World Bank," World Bank - Discussion Papers 110, World Bank.
- Vittas, Dimitri & Iglesias, Augusto, 1992. "The rationale and performance of personal pension plans in Chile," Policy Research Working Paper Series 867, The World Bank.
- Edwards, Sebastian & Edwards, Alejandra Cox, 1991. "Monetarism and Liberalization," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226184890, March.
- Ping-Lung Hsin & Olivia S. Mitchell, . "The Political Economy of Public Pensions: Pension Funding, Governance, and Fiscal Stress," Pension Research Council Working Papers 94-6, Wharton School Pension Research Council, University of Pennsylvania.
- World Bank, 2002. "Brazil : The New Growth Agenda, Volume 1. Policy Briefing," World Bank Other Operational Studies 15289, The World Bank.
- Glismann, Hans H. & Horn, Ernst-Jürgen, 1997. "Towards a funded system of social security: Design and implications ; the case of Germany," Kiel Working Papers 836, Kiel Institute for the World Economy.
- Peter Diamond, 1998. "The Economics of Social Security Reform," NBER Working Papers 6719, National Bureau of Economic Research, Inc.
- Sebastian Edwards & Alejandra Cox Edwards, 2000.
"Economic Reforms and Labor Markets: Policy Issues and Lessons from Chile,"
NBER Working Papers
7646, National Bureau of Economic Research, Inc.
- Sebastian Edwards & Alejandra Cox Edwards, 2000. "Economic reforms and labour markets: policy issues and lessons from Chile," Economic Policy, CEPR & CES & MSH, vol. 15(30), pages 181-230, 04.
- Johannes Jäger, 1998. "Die Privatisierung des Pensionssystems in Lateinamerika: Ursachen und Folgen des Experiments in Chile," SRE-Disc sre-disc-60, Institute for the Environment and Regional Development, Department of Socioeconomics, Vienna University of Economics and Business.
- Joshua Aizenman, 1998. "Privatization in Emerging Markets," NBER Working Papers 6524, National Bureau of Economic Research, Inc.
- Attanasio, Orazio & Kitao, Sagiri & Violante, Giovanni L., 2007.
"Global demographic trends and social security reform,"
Journal of Monetary Economics,
Elsevier, vol. 54(1), pages 144-198, January.
- Attanasio Orazio P. & Gianluca Violante, 1999. "Global Demographic Trends and Social Security Reform," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
- Chang-Tai Hsieh & Jonathan A. Parker, 2007.
"Taxes and Growth in a Financially Underdevelopped Country: Evidence from the Chilean Investment Boom,"
JOURNAL OF LACEA ECONOMIA,
LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- Chang-Tai Hsieh & Jonathan A. Parker, 2006. "Taxes and Growth in a Financially Underdeveloped Country: Evidence from the Chilean Investment Boom," NBER Working Papers 12104, National Bureau of Economic Research, Inc.
- Andrew A. Samwick, 1997.
"Discount Rate Heterogeneity and Social Security Reform,"
NBER Working Papers
6219, National Bureau of Economic Research, Inc.
- Samwick, Andrew A., 1998. "Discount rate heterogeneity and social security reform," Journal of Development Economics, Elsevier, vol. 57(1), pages 117-146, October.
- David Blake, 2004.
"The impact of wealth on consumption and retirement behaviour in the UK,"
Applied Financial Economics,
Taylor & Francis Journals, vol. 14(8), pages 555-576.
- David Blake, 2002. "The impact of wealth on consumption and retirement behaviour in the UK," LSE Research Online Documents on Economics 24949, London School of Economics and Political Science, LSE Library.
- Claudio Raddatz & Sergio Schmukler, 2010.
"Pension Funds And Capital Market Development: How Much Bang For The Buck?,"
38, Superintendencia de Pensiones, revised Feb 2010.
- Raddatz, Claudio & Schmukler, Sergio L., 2008. "Pension Funds And Capital Market Development:How Much Bang For The Buck?," Policy Research Working Paper Series 4787, The World Bank.
- Damjanovic, Tatiana, 2003. "The possibility of Pareto-Improving Pension Reform: More Arguments," Royal Economic Society Annual Conference 2003 53, Royal Economic Society.
- Casey B. Mulligan & Xavier Sala-i-Martin, 1999.
"Gerontocracy, retirement, and social security,"
Economics Working Papers
383, Department of Economics and Business, Universitat Pompeu Fabra.
- Casey B Mulligan, 1999. "Gerontocracy, Retirement, and Social Security," University of Chicago - George G. Stigler Center for Study of Economy and State 154, Chicago - Center for Study of Economy and State.
- Casey B. Mulligan & Xavier Sala-i-Martin, 1999. "Gerontocracy, Retirement, and Social Security," NBER Working Papers 7117, National Bureau of Economic Research, Inc.
- Olivia S. Mitchell & Flavio Ataliba Barreto, 1997. "After Chile, What? Second-Round Pension Reforms in Latin America," NBER Working Papers 6316, National Bureau of Economic Research, Inc.
- Robert Holzmann & Edward Palmer & David Robalino, 2012. "Nonfinancial Defined Contribution Pension Schemes in a Changing Pension World : Volume 1. Progress, Lessons, and Implementation," World Bank Publications, The World Bank, number 9378, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.