The Chilean Pension Reform: A Pioneering Program
In the mid-1970s Chile initiated a deep market-oriented reform program aimed at opening up the economy, privatizing state owned enterprises and stabilizing the macroeconomy. In the 1980s Chile began to grow at increasingly rapid rates -- between 1986 and 1995 the average rate of growth bordered 7% --, becoming a star performer. Perhaps one of the most admired aspects of the Chilean program has been the reform of the pension system, which replaced an inefficient pay-as-you-go system with a privately administered defined contribution one. " This reform has been credited with helping develop Chile's capital market, with reducing government contingent liabilities and with helping boost Chile's traditionally anemic savings rate. The purpose of this paper is to analyze the most salient aspects of the Chilean program and to evaluate its achievements to date. The paper provides a brief background of the Chilean reforms effort and deals with Chile's old pay-as-you-go system, including its degree of (in)efficiency, its distributive characteristics and its fiscal consequences. The functioning of the new privately managed system is discussed in detail, and the system's results up to date are evaluated. I also discuss transitional issues, including the fiscal consequences of the reforms. Finally, the analysis also deals with the reforms effects on labor markets and savings.
|Date of creation:||Nov 1996|
|Date of revision:|
|Publication status:||published as The Chilean Pension Reform: A Pioneering Program , Sebastian Edwards. in Privatizing Social Security , Feldstein. 1998|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Salvador Valdés, 1994. "Cargos por Administración en los Sistemas de Pensiones de Chile, los Estados Unidos, Malasia y Zambia," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 31(93), pages 185-228.
- Ping-Lung Hsin & Olivia S. Mitchell, .
"The Political Economy of Public Pensions: Pension Funding, Governance, and Fiscal Stress,"
Pension Research Council Working Papers
94-6, Wharton School Pension Research Council, University of Pennsylvania.
- Ping-Lung Hsin & Olivia Mitchell, 1994. "The Political Economy of Public Pensions: Pension Funding, Governance, and Fiscal Stress," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 9(1), pages 151-168, June.
- Haindl Rondanelli, Erik, 1996. "Chilean pension fund reform and its impact on saving," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34299, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
- Felipe G. Morandé, 1996.
"Savings in Chile: What Went Right?,"
Research Department Publications
4030, Inter-American Development Bank, Research Department.
- José Pablo Arellano, 1982. "Efectos Macroeconómicos de la Reforma Previsional Chilena," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 19(56), pages 111-122.
- Salvador Valdés & Peter Diamond, . "Social Security Reforms in Chile," Documentos de Trabajo 161, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Peter Diamond, 2004. "Social Security," American Economic Review, American Economic Association, vol. 94(1), pages 1-24, March.
- Rodrigo Cifuentes, 1995. "Reforma de los Sistemas Previsionales: Aspectos Macroeconómicos," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 32(96), pages 217-250.
- Edwards, Sebastian & Edwards, Alejandra Cox, 1991. "Monetarism and Liberalization," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226184890, July.
- Vittas, Dimitri & Iglesias, Augusto, 1992. "The rationale and performance of personal pension plans in Chile," Policy Research Working Paper Series 867, The World Bank.
- McGreevey, W., 1990. "Social security in Latin America: issues and options for World Bank," World Bank - Discussion Papers 110, World Bank.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:5811. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.