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The ex-ante effects of non-contributory pensions in Colombia and Peru

  • Javier Olivera

    ()

    (University College Dublin, Geary Institute and PEARL Institute for Research on Social Inequality, University of Luxembourg)

  • Blanca Zuluaga

    ()

    (Department of Economics, Icesi University)

The aim of this paper is to study the ex-ante effects of the implementation of a Non Contributory Pension (NCP) program in Colombia and Peru. Relying on household survey data, we simulate the potential impact of the transfer on poverty, inequality, fiscal cost, and the probability of affiliation to the contributory pension system. This last effect is the most direct behavioral effect one can expect from the implementation of a NCP scheme. For the behavioral response we estimate a Nested Logit Model. Our results show that a NCP in Colombia and Peru contributes to the reduction of poverty and inequality among the elderly, particularly in rural areas at affordable fiscal costs. Furthermore, there is not a large impact on the probability of affiliation to contributory pensions when the program is targeted to the poor (and extreme poor), with the exception of Peruvian women for whom there is always a sizeable reduction on their probability of affiliation to the contributory pension system.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2013-299.pdf
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Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 299.

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Length: 32 pages
Date of creation: Aug 2013
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2013-299
Contact details of provider: Web page: http://www.ecineq.org
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  1. Alberto Arenas de Mesa & Carmelo Mesa-Lago, 2006. "The Structural Pension Reform in Chile: Effects, Comparisons with Other Latin American Reforms, and Lessons," Oxford Review of Economic Policy, Oxford University Press, vol. 22(1), pages 149-167, Spring.
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  4. de Carvalho Filho, Irineu Evangelista, 2008. "Old-age benefits and retirement decisions of rural elderly in Brazil," Journal of Development Economics, Elsevier, vol. 86(1), pages 129-146, April.
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  7. Eric Edmonds & Kristin Mammen & Douglas L. Miller, 2004. "Rearranging the Family? Income Support and Elderly Living Arrangements in a Low Income Country," NBER Working Papers 10306, National Bureau of Economic Research, Inc.
  8. Leonardo Gasparini & Javier Alejo & Francisco Haimovich & Sergio Olivieri & Leopoldo Tornarolli, 2007. "Poverty among the Elderly in Latin America and the Caribbean," CEDLAS, Working Papers 0055, CEDLAS, Universidad Nacional de La Plata.
  9. Jean-Jacques Dethier & Pierre Pestieau & Rabia Ali, 2011. "The impact of a minimum pension on old age poverty and its budgetary cost. Evidence from Latin America," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  10. Parijs, Philippe Van, 1997. "Real Freedom for All: What (if Anything) Can Justify Capitalism?," OUP Catalogue, Oxford University Press, number 9780198293576.
  11. Marianne Bertrand & Sendhil Mullainathan & Douglas Miller, 2003. "Public Policy and Extended Families: Evidence from Pensions in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 27-50, June.
  12. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 1-25, June.
  13. Leonardo Gasparini & Javier Alejo & Francisco Haimovich & Sergio Olivieri & Leopoldo Tornarolli, 2010. "Poverty among older people in Latin America and the Caribbean," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(2), pages 176-207.
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