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Are there positive incentives from privatizing social security? A panel analysis of pension reform in Latin America

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  • PACKARD, TRUMAN G.

Abstract

The paper estimates the impact of social security reform – specifically, the transition from a purely public pay-as-you-go (PAYGO) system to one with private individual retirement accounts – on the share of the workforce that contributes to formal retirement security systems. Using a simple model of a segmented labor market, the paper exploits variation in data from a panel of eighteen Latin American countries, observed from 1980 to 1999. Results show a positive incentive effect after the introduction of individual retirement accounts that, ceteris paribus, increases the share of the economically active population who contribute to the reformed system. However, this takes place only gradually as employers and workers become familiar with the set of new social security institutions that reforms put in place.

Suggested Citation

  • Packard, Truman G., 2002. "Are there positive incentives from privatizing social security? A panel analysis of pension reform in Latin America," Journal of Pension Economics and Finance, Cambridge University Press, vol. 1(2), pages 89-109, July.
  • Handle: RePEc:cup:jpenef:v:1:y:2002:i:02:p:89-109_00
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    Cited by:

    1. Jung, Juergen & Tran, Chung, 2012. "The extension of social security coverage in developing countries," Journal of Development Economics, Elsevier, vol. 99(2), pages 439-458.
    2. Willmore, Larry, 2007. "Universal Pensions for Developing Countries," World Development, Elsevier, vol. 35(1), pages 24-51, January.
    3. Jere R. Behrman & Maria Cecilia Calderon & Olivia S. Mitchell & Javiera Vasquez & David Bravo, 2011. "First-Round Impacts of the 2008 Chilean Pension System Reform," Working Papers wp245, University of Michigan, Michigan Retirement Research Center.
    4. Rofman, Rafael, 2005. "Social security coverage in Latin America," Social Protection Discussion Papers and Notes 32754, The World Bank.
    5. Katarina R.I. Keller, 2019. "The effects of private social security accounts on economic growth in Eastern Europe," Economics Bulletin, AccessEcon, vol. 39(2), pages 1348-1360.

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