IDEAS home Printed from https://ideas.repec.org/p/mrr/papers/wp245.html
   My bibliography  Save this paper

First-Round Impacts of the 2008 Chilean Pension System Reform

Author

Listed:
  • Jere R. Behrman

    (University of Pennsylvania)

  • Maria Cecilia Calderon

    (Population Council)

  • Olivia S. Mitchell

    (Wharton School, University of Pennsylvania)

  • Javiera Vasquez

    (Universidad de Chile)

  • David Bravo

    (Universidad de Chile)

Abstract

Chile’s innovative privatized pension system has been lauded as possible model for Social Security system overhauls in other countries, yet it has also been critiqued for not including a strong safety net for the uncovered sector. In response, the Bachelet government in 2008 implemented reforms to rectify this shortcoming. Here we offer the first systematic effort to directly evaluate the reform’s impacts, focusing on the new Basic Solidarity Pension for poor households with at least one person age 65+. Using the Social Protection Survey, we show that targeted poor households received about 2.4 percent more household annual income, with little evidence of crowding-out of private transfers. We also suggest that recipient household welfare probably increased due to slightly higher expenditures on basic consumption including healthcare, more leisure hours, and improved self-reported health. While measured short-run effects are small, follow-ups will be essential to gauge longer-run outcomes.

Suggested Citation

  • 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.
    • Handle: RePEc:mrr:papers:wp245
    as

    Download full text from publisher

    File URL: http://mrdrc.isr.umich.edu/publications/Papers/pdf/wp245.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Elizabeth M. King & Jere R. Behrman, 2009. "Timing and Duration of Exposure in Evaluations of Social Programs," The World Bank Research Observer, World Bank, vol. 24(1), pages 55-82, February.
    2. Francisco Pino & Solange Berstein & Guillermo Larra�n, 2006. "Chilean Pension Reform: Coverage Facts and Policy Alternatives," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 227-279.
    3. Jere R. Behrman & Olivia S. Mitchell & Cindy Soo & David Bravo, 2010. "Financial Literacy, Schooling, and Wealth Accumulation," NBER Working Papers 16452, National Bureau of Economic Research, Inc.
    4. repec:ilo:ilowps:468785 is not listed on IDEAS
    5. 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.
    6. Francisco Pino & Solange Berstein & Guillermo Larra�n, 2006. "Chilean Pension Reform: Coverage Facts and Policy Alternatives," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 227-279.
    7. Samia Amin & Jishnu Das & Markus Goldstein, 2008. "Are You Being Served? New Tools for Measuring Services Delivery," World Bank Publications - Books, The World Bank Group, number 6921, April.
    8. Barr, Nicholas & Diamond, Peter, 2008. "Reforming Pensions: Principles and Policy Choices," OUP Catalogue, Oxford University Press, number 9780195311303, Decembrie.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. First-Round Impacts of the 2008 Chilean Pension System Reform
      by maximorossi in NEP-LTV blog on 2012-01-07 04:28:43
    2. First-Round Impacts of the 2008 Chilean Pension System Reform
      by maximorossi in NEP-LTV blog on 2012-01-07 04:28:43
    3. First-Round Impacts of the 2008 Chilean Pension System Reform
      by Maximo Rossi in Wikiprogress América Latina on 2012-01-06 03:24:00

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marcela V. Parada‐Contzen, 2019. "The Value of a Statistical Life for Risk‐Averse and Risk‐Seeking Individuals," Risk Analysis, John Wiley & Sons, vol. 39(11), pages 2369-2390, November.
    2. Kathleen McKiernan, 2021. "Social Security Reform in the Presence of Informality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 40, pages 228-251, April.
    3. Marcela Parada-Contzen, 2020. "Crowding-out in savings decisions, portfolio default adoption and home ownership: evidence from the Chilean retirement system," Review of Economics of the Household, Springer, vol. 18(2), pages 543-569, June.
    4. Byron J. Idrovo-Aguirre & Javier E. Contreras-Reyes, 2021. "Monetary Fiscal Contributions to Households and Pension Fund Withdrawals during the COVID-19 Pandemic: An Approximation of Their Impact on Construction Labor Supply in Chile," Social Sciences, MDPI, vol. 10(11), pages 1-10, November.
    5. Alessandro Bucciol & Martina Manfre' & Gregorio Gimenez, 2019. "Household Financial Decisions After the 2008 Chilean Pension Reform," Working Papers 10/2019, University of Verona, Department of Economics.
    6. Joubert, Clement & Todd, Petra E., 2024. "Gender pension gaps in a private retirement accounts system: A dynamic model of household labor supply and savings," Journal of Econometrics, Elsevier, vol. 243(1).
    7. Kathleen McKiernan, 2021. "Social Security Reform in the Presence of Informality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 40, pages 228-251, April.
    8. Kathleen McKiernan, 2018. "Welfare Impact of Social Security Reform: The Case of Chile in 1981," 2018 Meeting Papers 253, Society for Economic Dynamics.
    9. Mena, Gary & Hernani-Limarino, Werner L., 2015. "Intended and Unintended Effects of Unconditional Cash Transfers: The Case of Bolivia's Renta Dignidad," IDB Publications (Working Papers) 7350, Inter-American Development Bank.
    10. Italo López García & Andrés Otero, 2017. "The Effects of Means-tested, Noncontributory Pensions on Poverty and Well-being: Evidence from the Chilean Pension Reforms," Working Papers wp358, University of Michigan, Michigan Retirement Research Center.
    11. Joubert,Clement Jean Edouard, 2020. "Gender Pension Gaps in a Private Retirement Accounts System : A Dynamic Model of Household Labor Supply and Savings," Policy Research Working Paper Series 9322, The World Bank.
    12. Finamor, Lucas, 2024. "Labor Market Informality, Risk, and Insurance," MPRA Paper 121662, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Solange Berstein & Olga Fuentes & Nicolás Torrealba, 2011. "La Importancia de la Opción por Omisión en los Sistemas de Pensiones de Cuentas Individuales," Working Papers 44, Superintendencia de Pensiones, revised Jan 2011.
    2. Eduardo Fajnzylber & Gonzalo Reyes, 2015. "Knowledge, Information, and Retirement Saving Decisions: Evidence from a Large-Scale Intervention in Chile," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 83-117.
    3. Alejandro Reveiz & Carlos León & Freddy H. Castro & Gabriel piraquive, 2009. "Modelo de simulación del valor de la pensión de un trabajador en Colombia," Borradores de Economia 553, Banco de la Republica de Colombia.
    4. Sergey A. Budko & Dmitry Yu. Fedotov, 2017. "World Experience and Russian Practice of the Pension System’s Revenue Formation: Mathematic Methods of Estimation," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 3(3), pages 199-215.
    5. Todd, Petra E., 2012. "Effectiveness of interventions aimed at improving women's employability and quality of work : a critical review," Policy Research Working Paper Series 6189, The World Bank.
    6. James, Estelle & Iglesias, Augusto & Cox Edwards, Alejandra, 2008. "Disability insurance with pre-funding and private participation : the Chilean model," Social Protection Discussion Papers and Notes 42268, The World Bank.
    7. Liam A. Gallagher & Fionnuala Ryan, 2017. "A Portfolio Approach to Assessing an Auto-Enrolment Pension Scheme for Ireland," The Economic and Social Review, Economic and Social Studies, vol. 48(4), pages 515-548.
    8. Eduardo Fajnzylber, 2012. "Implicit redistribution in the Chilean Social Insurance System," Working Papers wp_019, Adolfo Ibáñez University, School of Government.
    9. Castañeda, Pablo & Castro, Rubén & Fajnzylber, Eduardo & Medina, Juan Pablo & Villatoro, Félix, 2021. "Saving for the future: Evaluating the sustainability and design of Pension Reserve Funds," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    10. Rodrigo Ceni, 2017. "Pension schemes and labor supply in the formal and informal sector," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-29, December.
    11. Pedro Moncarz, 2015. "Implicit redistribution within Argentina’s social security system: a micro-simulation exercise," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 24(1), pages 1-35, December.
    12. Alvaro Forteza & Irene Mussio, 2012. "Assessing Redistribution in the Uruguayan Social Security System," Journal of Income Distribution, Ad libros publications inc., vol. 21(1), pages 65-87, March.
    13. Cuevas, Conrado & Bernhardt, Dan, 2023. "When financial advice rocks the market," Emerging Markets Review, Elsevier, vol. 56(C).
    14. Conrado Cuevas & Dan Bernhardt & Mario Sanclemente, 2023. "Followers of the pied piper of pensioners," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(4), pages 1517-1550, November.
    15. Guillermo Larrain & Simon Ballesteros & Sebastián Garci, 2017. "Longevidad y Pensiones: una Propuesta de Seguro para la Cuarta Edad," Working Papers wp441, University of Chile, Department of Economics.
    16. Alvaro Foteza & Ignacio Apella & Eduardo Fajnzylber & Carlos Grushka & Ianina Rossi & Graciela Sanromán, 2011. "Contributions to social security in Argentina, Chile and Uruguay: Densities, transitions and duration," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 127-163, January-D.
    17. Alejandro Reveiz & Carlos Le�n & Freddy H. Castro & Gabriel Piraquive, 2009. "Modelo de simulaci�n del valor de la pensi�n de un trabajador en Colombia," Borradores de Economia 5387, Banco de la Republica.
    18. Jere R. Behrman & Jorge Gallardo-Garc�a & Susan W. Parker & Petra E. Todd & Viviana V�lez-Grajales, 2012. "Are conditional cash transfers effective in urban areas? Evidence from Mexico," Education Economics, Taylor & Francis Journals, vol. 20(3), pages 233-259, February.
    19. Ianina Rossi, 2018. "Systematic Determinants of Pensions in Latin America," Documentos de Trabajo (working papers) 0818, Department of Economics - dECON.
    20. Eduardo Fajnzylber & Gonzalo Reyes, 2015. "Knowledge, Information, and Retirement Saving Decisions: Evidence from a Large-Scale Intervention in Chile," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 83-117, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mrr:papers:wp245. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MRRC Administrator (email available below). General contact details of provider: https://edirc.repec.org/data/isumius.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.