The Extension of Social Security Coverage in Developing Countries
Australian National University (ANU) - School of Economics
Towson University - Department of Economics
November 13, 2007
CAEPR Working Paper No. 2007-026
We investigate the dynamic general equilibrium eﬀects of introducing a social assistance program to elderly informal sector workers in developing countries. We ﬁnd that the extension of such “retirement beneﬁts” in environments with lacking private sector risk-sharing mechanisms results in welfare increases and relatively minor eﬃciency losses. Our results suggest that welfare gains attributed to the insurance and redistribution function of the social assistance program dominate welfare losses from distortionary eﬀects of pension payments.
Number of Pages in PDF File: 44
Keywords: Social Security, Altruism, Informal Sector, Private Transfers, Welfare
JEL Classification: E6, E21, E26, H30, H53, H55, I38, O17working papers series
Date posted: November 13, 2007 ; Last revised: May 26, 2009
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