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
Date Written: June 14, 2022
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
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