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What Can Countries in Other Regions Learn from Social Security Reform in Latin America?


  • Indermit S. Gill
  • Ceren Ozer
  • Radu Tatucu


About a dozen countries in Latin America have enacted reforms that include elements being contemplated elsewhere, including the partial privatization of social security. It is not easy to draw universal lessons for social security reform from the experience of countries such as Argentina, Chile, and Mexico, however, where sizeable public pension systems went bankrupt before the populations aged, mainly because of mismanagement. Most developing economies have much smaller social security systems. Relatively well-managed systems in industrial countries face problems that are long term in nature and have been brought about by an aging population. The experiences of Latin America nevertheless offer some general lessons for countries in other parts of the world. These lessons relate to changes in labor market incentives accompanying reforms and how workers react to them, government actions that have met with success in managing the transition to funded pensions, and the expectations of individuals from social security systems. Latin America's reforms suggest that the most effective approach is to keep payroll taxes low, governments solvent, and social security systems focused on providing reasonable insurance against poverty in old age. Copyright The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail:, Oxford University Press.

Suggested Citation

  • Indermit S. Gill & Ceren Ozer & Radu Tatucu, 2008. "What Can Countries in Other Regions Learn from Social Security Reform in Latin America?," World Bank Research Observer, World Bank Group, vol. 23(1), pages 57-76, January.
  • Handle: RePEc:oup:wbrobs:v:23:y:2008:i:1:p:57-76

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    Cited by:

    1. Emma Aguila & Michael D. Hurd & Susann Rohwedder, 2014. "How Do Management Fees Affect Retirement Wealth Under Mexico’s Personal Retirement Accounts System?," Working Papers WR-1023, RAND Corporation.
    2. Emma Aguila & Michael D. Hurd & Susann Rohwedder, 2008. "Pension Reform in Mexico: The Evolution of Pension Fund Management Fees and their Effect on Pension Balances," Working Papers wp196, University of Michigan, Michigan Retirement Research Center.

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