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Social Security Coverage and the Labor Market in Developing Countries


  • Auerbach, Paula

    () (Inter-American Development Bank)

  • Genoni, Maria Eugenia

    () (World Bank)

  • Pagés, Carmen

    () (Inter-American Development Bank)


This paper examines the reasons behind the low rates of participation in old age pension programs in developing countries. Using a large set of harmonized household surveys from Latin America we assess how much of the low participation can be explained by involuntary rationing out of jobs with benefits versus how much can be instead explained by workers’ low willingness/ability to contribute towards such programs. We compare contribution patterns among wage employees, for whom participation is compulsory, with contribution patterns among self-employed workers, for whom participation is often voluntary. For both types of workers the probability of contributing to old age pension programs is similarly correlated with education, earnings, size of the employer, household characteristics and age. Our results indicate that on average at least 20-30 percent of the explained within-country variance in participation patterns can be accounted for by individuals’ low willingness to participate in old-age pension programs. Nonetheless, we also find evidence suggesting that some workers are rationed out of social security against their will.

Suggested Citation

  • Auerbach, Paula & Genoni, Maria Eugenia & Pagés, Carmen, 2007. "Social Security Coverage and the Labor Market in Developing Countries," IZA Discussion Papers 2979, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2979

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    Cited by:

    1. Maia Sieverding, 2016. "Youth Perspectives on Social Insurance in Egypt: Qualitative Insights on the Gap between Legal and Effective Coverage," Development Policy Review, Overseas Development Institute, vol. 34(6), pages 851-867, November.
    2. Marisa Bucheli & Rodrigo Ceni, 2010. "Informality Sectoral Selection and Earnings in Uruguay," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 25(2), pages 281-307.
    3. David E. Bloom & Dara Lee Luca, 2016. "The Global Demography of Aging: Facts, Explanations, Future," PGDA Working Papers 13016, Program on the Global Demography of Aging.
    4. Roushdy, Rania & Selwaness, Irène, 2017. "Who Is Covered and Who Underreports: An Empirical Analysis of Access to Social Insurance on the Egyptian Labor Market," GLO Discussion Paper Series 29, Global Labor Organization (GLO).
    5. Marisa Bucheli & Alvaro Forteza & Ianina Rossi, 2007. "Work history and the access to contributory pensions. The case of Uruguay," Documentos de Trabajo (working papers) 1607, Department of Economics - dECON.
    6. Bloom, David E. & Luca, Dara Lee, 2016. "The Global Demography of Aging: Facts, Explanations, Future," IZA Discussion Papers 10163, Institute for the Study of Labor (IZA).
    7. Xi Chen & Lipeng Hu & Jody L. Sindelar, 2017. "Leaving Money on the Table? Suboptimal Enrollment in the New Social Pension Program in China," NBER Working Papers 24065, National Bureau of Economic Research, Inc.
    8. Cristina Fernández & Leonardo Villar, 2017. "Taxonomía de la informalidad en América Latina," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 015814, FEDESARROLLO.
    9. María Claudia LLANES VALENZUELA & Gabriel Armando PIRAQUIVE G., 2012. "Sistemas pensionales y solidarios de Chile, Irlanda,Polonia, Brasil y Perú," ARCHIVOS DE ECONOMÍA 009596, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
    10. repec:eee:hapoch:v1_3 is not listed on IDEAS

    More about this item


    informality; old-age pension; social security; self-employment; Latin America;

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions

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