First-Round Impacts of the 2008 Chilean Pension System Reform

28 Pages Posted: 17 Nov 2011

See all articles by Jere Behrman

Jere Behrman

University of Pennsylvania - Department of Economics

Maria Cecilia Calderon

affiliation not provided to SSRN

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

Javiera Vasquez

affiliation not provided to SSRN

David Bravo

University of Chile

Date Written: September 1, 2011

Abstract

Chile’s innovative privatized pension system has been lauded as possible model for Social Security system overhauls in other countries, yet it has also been critiqued for not including a strong safety net for the uncovered sector. In response, the Bachelet government in 2008 implemented reforms to rectify this shortcoming. Here we offer the first systematic effort to directly evaluate the reform’s impacts, focusing on the new Basic Solidarity Pension for poor households with at least one person age 65. Using the Social Protection Survey, we show that targeted poor households received about 2.4 percent more household annual income, with little evidence of crowding-out of private transfers. We also suggest that recipient household welfare probably increased due to slightly higher expenditures on basic consumption including healthcare, more leisure hours, and improved self-reported health. While measured short-run effects are small, follow-ups will be essential to gauge longer-run outcomes.

Keywords: Chilean pension, retirement, basic solidarity pension

Suggested Citation

Behrman, Jere R. and Calderon, Maria Cecilia and Mitchell, Olivia S. and Vasquez, Javiera and Bravo, David, First-Round Impacts of the 2008 Chilean Pension System Reform (September 1, 2011). Michigan Retirement Research Center Research Paper No. WP 2011-245. Available at SSRN: https://ssrn.com/abstract=1960582 or http://dx.doi.org/10.2139/ssrn.1960582

Jere R. Behrman (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7704 (Phone)
215-573-2057 (Fax)

Maria Cecilia Calderon

affiliation not provided to SSRN ( email )

Olivia S. Mitchell

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

University of Pennsylvania - The Wharton School, Pension Research Council ( email )

3302 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Javiera Vasquez

affiliation not provided to SSRN ( email )

David Bravo

University of Chile ( email )

Pío Nono Nº1, Providencia
Santiago, R. Metropolitana 7520421
Chile

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