Is There a Positive Incentive Effect from Privatizing Social Security? Evidence from Latin America

Better pensions, better jobs: status and alternatives toward universal pension coverage in Latin America and the Caribbean

“…In order to project the percentage of old-age population that will have a pension in the coming years we perform an stylized simulation using the share of workers contributing to social security by decile and by country in 2010 as the baseline (see Appendix 1 for more details). We project coverage assuming that when gross domestic product (GDP) per capita doubles, the share of workers contributing increases by 10 percentage points, i.e., an elasticity growth-formality of 0.1, following Packard (2001), Djankov et al (2002), Loayza et al (2004) and Loayza and Rigolini (2011). This estimate is also in line with our own calculations using panel estimates with fixed effects (although lower than results obtained with cross-section analysis, which were found to be around 0.1).…”

Household Risk Management and Social Protection in Chile

“…However, the findings of these studies rely solely on simulations and casual observation of the aggregate data, rather than econometric investigation. The results of the panel analysis by Packard (2001) show a positive incentive effect after the introduction of individual retirement accounts that increases the share of the economically active population who contribute to the pension system. These results affirm Chile's transition away from pure pooling, defined-benefit arrangements toward individual savings as the primary means of securing income for old age (that is, mitigating the loss of earnings ability).…”

Work histories and the access to contributory pensions: the case of Uruguay

“…Analysts have long been using these data to compute coverage of the labor force as the proportion of the active population that contributes to the social security system. Several researchers have used qualitative dependent-variable models to estimate the probability that workers contribute and to analyze what factors impact this probability (Barrientos, 1996(Barrientos, , 1998Holzmann et al, 2000 ;Packard, 2001 ; Barr and Packard, 2003;Auerbach et al, 2005 ;Li and Olivera, 2005 ;Bustamante and Paola, 2006 ;Packard et al, 2006, among others). The household surveys are rich data sources, but they only provide cross-section information at the individual level, so these surveys are not suited to the type of questions we aim to answer.…”

“…Rofman and Lucchetti (2006) provide extensive computations of this and related indicators across several Latin American countries and explore the links between the rate of coverage and several key socio-economic characteristics (like education, sector of activity, size of the firm, etc.). Using the same data source, several researchers have used qualitative dependent variable models to estimate the probability that workers contribute to social security and to analyze what factors impact on this probability (Auerbach et al 2005;Barr and Packard 2003;Barrientos 1996 and1998;Bustamante and Paola 2006;Holzmann et al 2000;Li and Olivera 2005;Packard et al 2006;Packard 2001; among others). The household surveys are rich data sources but they only provide cross section information at individual level, so these surveys are not suited to the type of questions we aim to answer.…”