The Effects of the Minimum Pension Reform in a Defined Contribution Pension System: The Case of Chile

47 Pages Posted: 23 Jun 2022 Last revised: 29 Sep 2022

See all articles by Jorge Sabat

Jorge Sabat

Universidad Diego Portales

Date Written: June 14, 2022

Abstract

Abstract Using longitudinal data on roughly 16,800 workers, I estimate the effects of a reform that introduced a solidarity pillar on the Chilean defined contribution pension system. Empirically, I document a negative and significant effect on the propensity to save for retirement among workers with historically low incomes and contribution densities. The disincentive effects are smaller than the predictions of a standard neoclassical model. However, I show that they can be rationalized by the introduction of behavioral assumptions.

Keywords: retirement, saving, hyperbolic discounting

JEL Classification: D14, G11, J26

Suggested Citation

Sabat, Jorge, The Effects of the Minimum Pension Reform in a Defined Contribution Pension System: The Case of Chile (June 14, 2022). Available at SSRN: https://ssrn.com/abstract=4136711 or http://dx.doi.org/10.2139/ssrn.4136711

Jorge Sabat (Contact Author)

Universidad Diego Portales ( email )

Av. Santa Clara 797
Santiago, RegiĆ³n Metropolitana
Chile

HOME PAGE: http://https://sites.google.com/site/jorgesabat/home

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