Hostname: page-component-cd9895bd7-fscjk Total loading time: 0 Render date: 2024-12-23T13:30:49.005Z Has data issue: false hasContentIssue false
  • English
  • Français

Redistribution, insurance and incentives to work in Latin-American pension programs

Published online by Cambridge University Press:  16 February 2012

ALVARO FORTEZA  and
GUZMÁN OURENS
ALVARO FORTEZA*
Affiliation:
Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República, Uruguay
GUZMÁN OURENS*
Affiliation:
Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República, Uruguay
*
(e-mail: [email protected])
(e-mail: [email protected])
Get access Rights & Permissions [Opens in a new window]

Abstract

We present a new database of social security indicators for 11 Latin-American countries designed to show how much they promise to pay in return to contributions. These are based on micro-simulations according to existing norms. We use response-surface analysis to characterize simulation results. Our results indicate that most programs are progressive. The length of service (LOS) has a strong impact on the expected returns to contributions. In several programs, the expected rates of return exhibit striking discontinuities in the LOS, mostly due to vesting period conditions. This implies these programs may be exacerbating income risk.

Keywords

H55J14J26Internal rate of returnreplacement rateredistributioninsuranceincentives to work
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 11 , Issue 3 , July 2012 , pp. 337 - 364
Copyright
Copyright © Cambridge University Press 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. (2009) Introduction to Modern Economic Growth. Boston: MIT.Google Scholar
Afonso, L. E. and Fernandes, R. (2005) Uma estimativa dos aspectos distributivos da previdencia social no Brasil. Revista Brasileira de Economia, 59(3): 295–334.CrossRefGoogle Scholar
Beach, W. and Davis, G. (1998) Social security's rate of return. CDA 98-01. Heritage Foundation, 21: 12.Google Scholar
Berstein, S., Larraín, G., and Pino, F. (2006) Chilean pension reform: coverage facts and policy alternatives. Economía, 6(2): 227–279.Google Scholar
Bosworth, B., Burtless, G., Favreault, M., O'Hare, J., Ratcliffe, C., Smith, K., Toder, E., and Uccello, C. (1999) Modeling Income in the near Term – Projections of Retirement Income through 2020 for the 1931–1960 Birth Cohorts. Washington, DC: The Brookings Institution.Google Scholar
Brown, J. R., Coronado, J. L. and Fullerton, D. (2009) Is Social Security Part of the Social Safety Net? NBER WP 15070.Google Scholar
Bucheli, M., Forteza, A. and Rossi, I. (2010) Work histories and the access to contributory pensions: the case of Uruguay. Journal of Pension Economics and Finance, 9(3): 369–391.CrossRefGoogle Scholar
Dorfman, M. and Forteza, A. (2010) Strengthening Caribbean Pensions. Improving Equity and Sustainability. Washington, DC: World Bank. Report No. 47673-LAC.Google Scholar
Duggan, J., Gillingham, R. and Greenlees, J. (1995) Progressive Returns to Social Security? An Answer from Social Security Records. Washington, DC: Office of Economic Policy, U.S. Department of the Treasury. Office of Prices and Living Conditions. U.S. Bureau of Labor Statistics, Research Paper 9501.Google Scholar
Forteza, A., Apella, I., Fajnzylber, E., Grushka, C., Rossi, I. and Sanroman, G. (2009) Work Histories and Pension Entitlements in Argentina, Chile and Uruguay. Washington, DC, World Bank Discussion Paper No. 0927.CrossRefGoogle Scholar
Garrett, D. (1995) The effects of differential mortality rates on the progressivity of social security. Economic Inquiry, 33: 457–75.Google Scholar
Government of Argentina (1993–2007) Laws 24.241, 26.222. Decree 1.306/00.Google Scholar
Government of Brazil (1991–1999) Law 8.213. Decree 3.265.Google Scholar
Government of Chile (2008) Law 20.255. Diario Oficial/Normas Generales/Año 2008/DO 17/03/2008 LEY 20.255.Google Scholar
Government of Colombia (1993) Law 100. Diario oficial año CXXIX. N. 41148. 23, Diciembre.Google Scholar
Government of Colombia (2003) Law 797. Diario oficial año CXXXVIII. N. 45079. 29, Enero.Google Scholar
Government of Colombia (2007) Law 1122. Diario oficial año CXLII. N. 46506.9, Enero.Google Scholar
Government of Uruguay (1995) Law 16.713. Published D.O. 11 Sep/995 – No. 24372.Google Scholar
Government of Uruguay (2002) Law 17.445. Published D.O. 9 Jan/002 – No. 25926.Google Scholar
Government of Uruguay (2008) Law 18.395. Published D.O. 6 Nov/008 – No. 27606.Google Scholar
Government of Venezuela (2008) Decree 6266. http://www.ivss.gov.ve/pdf/leydelsegurosocial.pdf.Google Scholar
Gruber, J. (1999) Social security and retirement in Canada. In Gruber, J. and Wise, D. A. (eds), Social Security and Retirement Around the World. Chicago, IL: University of Chicago Press, 77–99.Google Scholar
Gruber, J. and Wise, D. A. (eds) ( 1999) Social Security and Retirement Around the World. Chicago, IL: University of Chicago Press.Google Scholar
Gruber, J. and Wise, D. A. (eds) ( 2004) Social Security Programs and Retirement Around the World: Micro Estimation. Chicago, IL: University of Chicago Press.Google Scholar
Gruber, J. and Wise, D. A. (eds) ( 2007) Social Security Programs and Retirement around the World: Fiscal Implications of Reform. Chicago, IL: University of Chicago Press.Google Scholar
Gustman, A. and Steinmeier, T. (2001) How Effective Is Redistribution under the Social Security Benefit Formula? Journal of Public Economics, 82: 1–28.Google Scholar
Hamermesh, Daniel S. and Rees, Albert (1993) The Economics of Work and Pay. New York: Harper Collins College Publishers.Google Scholar
Hendry, D. (1984) Monte Carlo simulation in econometrics. In Griliches, Z. and Intriligator, M. (eds), Handbook of Econometrics. Amsterdam: North Holland, 937–76.CrossRefGoogle Scholar
Liebman, J. B. (2001) Redistribution in the current U.S. Social Security System. NBER WP 8625.Google Scholar
Leimer, D. R. (1999) Lifetime redistribution under the social security program: a literature synopsis. Social Security Bulletin, 62(2): 43–51.Google Scholar
Mesa Lago, C. (2006) Private and public pension systems compared: an evaluation of the Latin American experience. Review of Political Economy, 8(3): 317–34.Google Scholar
Myers, R. H., Montgomery, D. C. and Anderson-Cook, C. M. (2009) Response Surface Methodology. Process and Product Optimization Using Designed Experiments. Wiley Series in Probability and Statistics, 2nd edition. USA: John Wiley and Sons Inc.Google Scholar
OECD (2009) Pensions at a Glance 2009. Retirement-Income Systems in OECD Countries. Paris: OECD.Google Scholar
Robalino, D. (2005) Pensions in the Middle East and North Africa. Time for Change. Washington, DC: World Bank.Google Scholar
Robichek, A. A. (1975) Interpreting the Results of Risk Analysis. Journal of Finance, 30(5): 1384–86.Google Scholar
SAFP (2010) El Nuevo sistema de pensiones. Chile. Series de Documentos, Superintendencia de Pensiones http://www.safp.cl/573/propertyvalue-2474.html.Google Scholar
Social Security Administration (2008) Social Security Programs Throughout the World: The Americas, 2007. Washington, USA: Social Security Administration, ISSA.Google Scholar
Whitehouse, E. (2007) Pensions Panorama. Washington, DC: The International Bank for Reconstruction and Development/The World Bank.Google Scholar
World Bank (1994) Averting the Old Age Crisis. Policies to Protect the Old and Promote Growth. Washington, DC: World Bank.Google Scholar
World Health Organization (2008) http://www.who.int/whosis/database/life_tables/life_tables.cfm.Google Scholar