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The gender impact of pension reform : a cross-country analysis

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  • James, Estelle
  • Edwards, Alejandra Cox
  • Wong, Rebecca
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    Abstract

    Pension systems may have a different impact on gender because women are less likely than men to work in formal labor markets and earn lower wages when they do. Recent multipillar pension reforms tighten the link between payroll contributions and benefits, leading critics to argue that they will hurt women. In contrast, supporters of these reforms argue that it will help women by the removal of distortions that favored men and the better targeted redistributions in the new systems. To test these conflicting claims and to analyze more generally the gender effect of alternative pension systems, the authors examine the differential impact of the new and old systems in three Latin American countries-Argentina, Chile, and Mexico. Based on household survey data, they simulate the wage and employment histories of representative men and women, the pensions they are likely to generate under the new and old rules, and the relative gains or losses of men and women because of the reform. The authors find that women do accumulate private annuities that are only 30-40 percent those of men in the new systems. But this effect is mitigated by sharp targeting of the new public pillars toward low earners, many of whom are women, and by restrictions on payouts from the private pillars, particularly joint annuity requirements. As a result of these transfers, total lifetime retirement benefits for women reach 60-80 percent those of men, and for"full career"women they equal or exceed benefits of men. Also as a result, women are the biggest gainers from the pension reform. For women who receive these transfers, female/male ratios of lifetime benefits in the new systems exceed those in the old systems in all three countries. Private intra-household transfers from husband to wife in the form of joint annuities play the largest role.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3074.

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    Date of creation: 30 Jun 2003
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    Handle: RePEc:wbk:wbrwps:3074

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    Related research

    Keywords: Pensions&Retirement Systems; Public Health Promotion; Health Monitoring&Evaluation; Population&Development; Gender and Development; Health Monitoring&Evaluation; Pensions&Retirement Systems; Population&Development; Agricultural Knowledge&Information Systems; Anthropology;

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    References

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    1. Patricia Apps, 2003. "Gender, Time Use and Models of the Household," CEPR Discussion Papers 464, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    2. De Mesa, Alberto Arenas & Bertranou, Fabio, 1997. "Learning from social security reforms: Two different cases, Chile and Argentina," World Development, Elsevier, vol. 25(3), pages 329-348, March.
    3. Estelle James & Gary Ferrier & James H. Smalhout & Dimitri Vittas, 2000. "Mutual Funds and Institutional Investments -- What Is the Most Efficient Way to Set Up Individual Accounts in a Social Security System?," NBER Chapters, in: Administrative Aspects of Investment-Based Social Security Reform, pages 77-136 National Bureau of Economic Research, Inc.
    4. B. Douglas Bernheim & Lorenzo Forni & Jagadeesh Gokhale & Laurence J. Kotlikoff, 2001. "The mismatch between life insurance holdings and financial vulnerabilities: evidence from the Health and Retirement Survey," Working Paper 0109, Federal Reserve Bank of Cleveland.
    5. Bertranou, Fabio M., 2001. "Pension Reform and Gender Gaps in Latin America: What are the Policy Options?," World Development, Elsevier, vol. 29(5), pages 911-923, May.
    6. Diamond, Peter A., 2002. "Social Security Reform," OUP Catalogue, Oxford University Press, number 9780199247899, Octomber.
    7. Barrientos, Armando, 1998. "Pension reform, personal pensions and gender differences in pension coverage," World Development, Elsevier, vol. 26(1), pages 125-137, January.
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    Cited by:
    1. David Robalino, 2005. "Pensions in the Middle East and North Africa: Time for Change," World Bank Publications, The World Bank, number 7427, October.
    2. Estelle James & Guillermo Martinez & Augusto Iglesias, 2004. "Payout Choices by Retirees in Chile: What Are They and Why?," Working Papers wp068, University of Michigan, Michigan Retirement Research Center.
    3. World Bank, 2012. "Toward Gender Equality in East Asia and the Pacific : A Companion to the World Development Report," World Bank Publications, The World Bank, number 12598, October.

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