Effects of Future Pension Benefits on Pre-Retirement Labor Supply: Evidence from Chile

37 Pages Posted: 26 Nov 2018

See all articles by Oscar Becerra

Oscar Becerra

Universidad de los Andes, Colombia

Date Written: November 13, 2018

Abstract

In this paper, I estimate the effect of future pension benefits on pre-retirement labor supply for a representative sample of Chilean workers. Using non-linear patterns in pension benefit formulas and a reform that changed non-contributory pensions, I estimate the effect of pension accrual and expected pension wealth on labor force and contributory-sector participation, labor earnings, and hours worked. I find that the effect is related to the impact of pension accrual on the probability to contribute to the pension system. The effect is heterogeneous, and is concentrated among middle-age workers, low-skilled workers, workers with no savings, and workers with higher financial literacy.

Keywords: Labor supply, pension benefits, financial literacy

JEL Classification: J26, J32, H21

Suggested Citation

Becerra, Oscar, Effects of Future Pension Benefits on Pre-Retirement Labor Supply: Evidence from Chile (November 13, 2018). Documento CEDE No. 2018-55, Available at SSRN: https://ssrn.com/abstract=3288804 or http://dx.doi.org/10.2139/ssrn.3288804

Oscar Becerra (Contact Author)

Universidad de los Andes, Colombia ( email )

Carrera Primera # 18A-12
Bogota, DC D.C. 110311
Colombia

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