The Extension of Social Security Coverage in Developing Countries
44 Pages Posted: 13 Nov 2007 Last revised: 26 May 2009
Date Written: November 13, 2007
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.
Keywords: Social Security, Altruism, Informal Sector, Private Transfers, Welfare
JEL Classification: E6, E21, E26, H30, H53, H55, I38, O17
Suggested Citation: Suggested Citation