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Is there a positive incentive effect from privatizing Social Security? Evidence from Latin America (English)

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.

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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