The author estimated the impact of social security reform - specifically, the transition from a purely public pay-as-you-go (PAYGO) system to one with private individual retirement accounts - on the share of the workforce that contributes to formal retirement security systems. Using a simple model of a segmented labor market, I explored variations in data from a panel of 18 Latin American countries observed between 1980 and 1999. The author founds a positive incentive effect after the introduction of individual retirement accounts that, ceteris paribus, increases the share of the economically active population who contribute to the reformed system. However, this takes place only gradually as employers and workers become familiar with the set of new social security institutions that reforms put in place.
Details
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Author
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Document Date
2004/01/01
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Document Type
Working Paper
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Report Number
30399
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2010/07/01
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Doc Name
Is there a positive incentive effect from privatizing Social Security? Evidence from Latin America
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Keywords
individual retirement account;social security;lower tax;payroll tax;Labor Market;fixed effect;social security system;elasticity of demand for labor;social security reform;life expectancy of woman;life expectancy at birth;social security tax;market rate of interest;economically active population;share of woman;social security institutions;number of workers;retirement security;labor market distortion;per capita income;social security contribution;department of economics;impact of reforms;social insurance;number of jobs;endogenous growth model;risk of poverty;male life expectancy;labor market adjustment;payroll tax rate;cost of labor;
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Citation
Packard,Truman G.
Is there a positive incentive effect from privatizing Social Security? Evidence from Latin America (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/556151468752972662/Is-there-a-positive-incentive-effect-from-privatizing-Social-Security-Evidence-from-Latin-America