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How much do Latin American pension programs promise to pay back?


  • Alvaro Forteza

    () (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Guzman Ourens

    () (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)


We present a new database of social security indicators for eleven Latin American countries designed to assess pension schemes in terms of the payments they promise in return to contributions. Based on this data, we analyze inequality, insurance and incentives to work. Our results indicate that most programs analyzed are progressive in the sense that, other things equal, they yield higher returns to low than to high income workers. Poor workers, notwithstanding, often have flat age-earnings profiles and lower life expectancy, both of which reduce the rates of return received from social security. The Argentinean and (the pre-2008) Uruguayan programs severely punish short contribution careers, providing strong incentives but poor social protection. The Brazilian and Chilean programs show a better balance between insurance against the risk of short working careers and incentives to work. Argentina, Chile and Uruguay passed reforms to their main pension programs in 2008. Unlike the Argentinean reform, the Chilean and Uruguayan 2008 reforms strengthened the social protection that programs provide, shifting the balance towards more insurance and less incentives to work.

Suggested Citation

  • Alvaro Forteza & Guzman Ourens, 2009. "How much do Latin American pension programs promise to pay back?," Documentos de Trabajo (working papers) 3109, Department of Economics - dECON.
  • Handle: RePEc:ude:wpaper:3109

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    References listed on IDEAS

    1. Patrick Georges, 2008. "Liberalizing NAFTA Rules of Origin: A Dynamic CGE Analysis," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 672-691, September.
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    Cited by:

    1. Piggott, John & Sane, Renuka, 2009. "Indexing pensions," Social Protection and Labor Policy and Technical Notes 52445, The World Bank.
    2. repec:lap:journl:598 is not listed on IDEAS
    3. Holzmann, Robert, 2010. "Bringing Financial Literacy and Education to Low and Middle Income Countries: The Need to Review, Adjust, and Extend Current Wisdom," IZA Discussion Papers 5114, Institute for the Study of Labor (IZA).
    4. James, Estelle, 2009. "Rethinking survivor benefits," Social Protection and Labor Policy and Technical Notes 52919, The World Bank.
    5. Guillermo Cruces & Marcelo Bérgolo, 2013. "Informality and Contributory and Non-Contributory Programmes. Recent Reforms of the Social-Protection System in Uruguay," Development Policy Review, Overseas Development Institute, vol. 31(5), pages 531-551, September.
    6. Lord, Janet & Posarac, Aleksandra & Nicoli, Marco & Peffley, Karen & Mcclain-Nhlapo, Charlotte & Keogh, Mary, 2010. "Disability and international cooperation and development : a review of policies and practices," Social Protection and Labor Policy and Technical Notes 56092, The World Bank.
    7. Ra, Young-Sun & Shim, Kyung Woo, 2009. "The Korean case study : past experience and new trends in training policies," Social Protection and Labor Policy and Technical Notes 53696, The World Bank.
    8. repec:spr:izalpo:v:6:y:2017:i:1:d:10.1186_s40173-017-0085-1 is not listed on IDEAS

    More about this item


    Social Security internal rate of return; replacement rates.;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies


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