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Social security coverage in Chile, 1990-2001 (Inglês)

This empirical paper identifies the main forces that influenced the coverage of the new Chilean pension system during the 1990s. I find that government policy determined coverage to a large extent. The key policies in this respect in order of importance were: the level of the Minimum Salary, the level of the flat commission charged by pension fund managers, the rate of economic growth, and the size of subsidies given to workers when they use state hospitals. If the governments of Chile in the 1990s had used these policy levers in a range of different ways, then contributors as of August 2001 could have been anywhere between 3.3 and 4.3 million workers. My second finding - from non econometric evidence - is that the Minimum Salary applies to reported earnings rather than actual earnings. Thus, increasing the Minimum Salary does not appear to reduce coverage by inducing formal-sector employers to fire low productivity workers but does so by forcing poor workers to save more for old age and by reducing the amount of Minimum Pension subsidy that they can expect. The third result is that the net impact of raising the Minimum Pension floor is not statistically different from zero. To explain this I present a simple model that shows that an increase in the level of the Minimum Pension floor has two effects on coverage, of opposing signs, so the net impact is uncertain.


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    Valdes Prieto,Salvador

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    Documento de trabalho departamental

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    América Latina e Caribe,

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    Social security coverage in Chile, 1990-2001

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    pay as you go;average per capita income;tax on labor income;sample period;pension policy;Fund Management Company;expected present value;contribution rate;benefit formula;demand for labor;real interest rate;supply of labor;individual account;defined benefit plan;work at home;labor market factor;number of workers;average coverage rate;unit of output;years of service;cost of capital;family support network;income tax policy;private sector worker;standard of living;pension fund management;unemployment insurance program;annual budget law;demand for fund;pension fund asset;cost of fund;account balance;average age;voluntary saving;minimum pension;pension right;financial return;pension reform;contributory pension;business cycle;Regional Studies;mandatory contribution;Labor Policies;labor policy;hidden tax;tax rate;net impact;simple model;informal sector;administrative cost;property right;minimum wage;public debt;social legislation;econometric evidence;average earning;pension benefit;empirical work;Health policies;wage tax;empirical result;financing method;contribution requirement;collection agency;macroeconomic condition;fiscal cost;explanatory variable;macroeconomic activity;permanent worker;fiscal surplus;market equilibrium;fund market;family transfer;social worker;pension saving;residual claimant;government tax;asset market;targeted subsidy;universal subsidy;labor taxes;average wage;targeted program;general taxation;transaction cost;Pension Income;labor legislation;eligibility conditions;mutual fund;mutual insurance;bank deposit;state enterprises;expected value;total tax;liquidity constraint;empirical counterpart;education level;statutory contribution;individual incentive;risk allocation;public expenditure;financial vehicle;steady state;tax distortion;transition phase;subsidy rate;voluntary contribution;fiscal expenditure;political support;pension scheme;political legitimacy;monthly wage;social cost;working life;pension system;positive impact;pension account;Economic Policy;government's budget;mandatory severance;equity reasons;bilateral bargain;formal employment;pension age;forced saving;negative effect;mandatory saving;emergency need;legal rule;Labor Law;constant term;home production;eligibility requirement;administrative expense;oecd countries;considerable difference;voluntary basis;opposition party;tax authorities;tax authority;substantial variation;indicator variable;fertility rate;real wage;labor input;contributions benefit;adjustment factor;total employment;monthly data;democratic government;monthly contribution;minimum salary;employer's contribution;pension contribution;labor contract;liquidity cost;account statement;individual level;transactions cost;flat fee;Enforcement Policies;seasonal effect;enforcement policy;future pension;investment risk;



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