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Systematic Determinants of Pensions in Latin America

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  • Ianina Rossi

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

In this paper I assess Latin American contributory pension schemes in terms of their role in replacing earnings after retirement. I look for key elements that can explain differences, resulting in useful policy recommendations. My analysis is based on microsimulations of work histories and pension rights in 10 Latin American countries according to current norms and controlled scenarios. I use response surface analysis to summarize the results, performing regression analysis to assess the impact of changes in control variables on the effective replacement rate (ERR). The effects of covariates at scenario level and at regime level are considered. Results show that individual choices and luck are very relevant in determining ERRs. I also find that some policy variables have a great impact. This is the case of the contribution rate. These findings are particularly relevant for the current discussion on pension reform and pension adequacy in Latin America.

Suggested Citation

  • Ianina Rossi, 2018. "Systematic Determinants of Pensions in Latin America," Documentos de Trabajo (working papers) 0818, Department of Economics - dECON.
    • Handle: RePEc:ude:wpaper:0818
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    File URL: https://hdl.handle.net/20.500.12008/19974
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    References listed on IDEAS

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    1. Jeffrey R. Brown & Julia Lynn Coronado & Don Fullerton, 2009. "Is Social Security Part of the Social Safety Net?," NBER Chapters, in: Tax Policy and the Economy, Volume 23, pages 37-72, National Bureau of Economic Research, Inc.
    2. Ignacio Álvarez & Natalia da Silva & Álvaro Forteza & Ianina Rossi, 2010. "¿Qué Incentivos al Retiro Genera la Seguridad Social? El Caso Uruguayo," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 47(136), pages 217-247.
    3. Feldstein, Martin & Liebman, Jeffrey B. (ed.), 2002. "The Distributional Aspects of Social Security and Social Security Reform," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226241067, December.
    4. Martin Feldstein & Jeffrey B. Liebman, 2002. "The Distributional Aspects of Social Security and Social Security Reform," NBER Books, National Bureau of Economic Research, Inc, number feld02-1, March.
    5. Barr, Nicholas, 2001. "The Welfare State as Piggy Bank: Information, Risk, Uncertainty, and the Role of the State," OUP Catalogue, Oxford University Press, number 9780199246595.
    6. Alvaro Foteza & Ignacio Apella & Eduardo Fajnzylber & Carlos Grushka & Ianina Rossi & Graciela Sanromán, 2011. "Contributions to social security in Argentina, Chile and Uruguay: Densities, transitions and duration," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 127-163, January-D.
    7. Francisco Pino & Solange Berstein & Guillermo Larraín, 2006. "Chilean Pension Reform: Coverage Facts and Policy Alternatives," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 227-279, January.
    8. Javier Alonso & Carmen Hoyo & David Tuesta, 2014. "Un modelo para el sistema de pensiones en Mexico.Diagnostico y recomendaciones," Working Papers 1407, BBVA Bank, Economic Research Department.
    9. Marisa Bucheli & Alvaro Forteza & Ianina Rossi, 2007. "Work history and the access to contributory pensions. The case of Uruguay," Documentos de Trabajo (working papers) 1607, Department of Economics - dECON.
    10. Alonso, Javier & Sánchez, Rosario & Tuesta, David, 2014. "Un modelo para el sistema de pensiones en el Perú: Diagnóstico y recomendaciones," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 27, pages 81-98.
    11. Nicholas Barr & Peter Diamond, 2010. "Reforming Pensions: Lessons from Economic Theory and Some Policy Directions," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2010), pages 1-23, August.
    12. Filip Chybalski & Edyta Marcinkiewicz, 2016. "The Replacement Rate: An Imperfect Indicator of Pension Adequacy in Cross-Country Analyses," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 126(1), pages 99-117, March.
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    More about this item

    Keywords

    contribution rate; pension; replacement rate; retirement; social security;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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