Basic Pensions and Poverty Reduction in Sub-Saharan Africa
The WDA-HSG Discussion Paper Series on Demographic Issues, No. 2010/2
26 Pages Posted: 20 May 2011
Date Written: January 11, 2010
This paper explores the role of basic pensions in reducing poverty in sub-Saharan Africa. Using the most recent Senegalese household income-expenditure data survey, we set up scenarios of universal and means-tested basic pension schemes with different generosity levels. Simulations suggest that basic pension benefits have sizable impact on poverty decline among household, with elderly members, which translates into large decreases in aggregate poverty measures. The paper also analyzes the fiscal costs of basic pensions and shows that these are fiscally affordable as long as pension levels are reasonable. This suggests that basic pension programs could be financially sustainable in sub-Saharan African.
Keywords: Poverty, Pension, Old-age, Fiscal policies, sub-Saharan Africa, Senegal
JEL Classification: D39, H39, H55, I32, I38, J14, O55
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