How much do Latin American pension programs promise to pay back?
AbstractWe present a new database of social security indicators for eleven Latin American countries designed to assess pension schemes in terms of the payments they promise in return to contributions. Based on this data, we analyze inequality, insurance and incentives to work. Our results indicate that most programs analyzed are progressive in the sense that, other things equal, they yield higher returns to low than to high income workers. Poor workers, notwithstanding, often have flat age-earnings profiles and lower life expectancy, both of which reduce the rates of return received from social security. The Argentinean and (the pre-2008) Uruguayan programs severely punish short contribution careers, providing strong incentives but poor social protection. The Brazilian and Chilean programs show a better balance between insurance against the risk of short working careers and incentives to work. Argentina, Chile and Uruguay passed reforms to their main pension programs in 2008. Unlike the Argentinean reform, the Chilean and Uruguayan 2008 reforms strengthened the social protection that programs provide, shifting the balance towards more insurance and less incentives to work.
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Bibliographic InfoPaper provided by Department of Economics - dECON in its series Documentos de Trabajo (working papers) with number 3109.
Length: 50 pages
Date of creation: Dec 2009
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Social Security internal rate of return; replacement rates.;
Other versions of this item:
- Forteza, Alvaro & Ourens, Guzman, 2009. "How much do Latin American pension programs promise to pay back?," Social Protection Discussion Papers 52447, The World Bank.
- 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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