Pooling, Savings, and Prevention Mitigating the Risk of Old Age Poverty in Chile

74 Pages Posted: 20 Apr 2016

See all articles by Truman G. Packard

Truman G. Packard

World Bank - Europe and Central Asia Region; University of Oxford - Department of Economics

Date Written: May 21, 2002

Abstract

Using data collected in a survey on risk and social insurance in Chile, Packard finds that workers who entered the labor market after the pension reform of 1981 have a greater "contribution density" than those who contributed to the previous social security system. Further, the expectation of care from children and the amount spent on their education significantly lowers the likelihood of contribution to the pension system. Workers who have met the contributory requirements to qualify for the minimum pension guaranteed by the government are significantly less likely to continue making contributions. The likelihood of contributions beyond the eligibility threshold being lowered further, the greater the market rental value of respondents' homes. Furthermore, individuals with a greater tolerance for risk contribute, suggesting that there are retirement security investments in Chile that are perceived as relatively less risky than saving in the reformed pension system. The results indicate that housing could be one such investment.

This paper - a product of the Human Development Sector Unit, Latin America and the Caribbean Region - is part of a regional study on social security reform.

Suggested Citation

Packard, Truman G., Pooling, Savings, and Prevention Mitigating the Risk of Old Age Poverty in Chile (May 21, 2002). Available at SSRN: https://ssrn.com/abstract=636198

Truman G. Packard (Contact Author)

World Bank - Europe and Central Asia Region ( email )

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University of Oxford - Department of Economics ( email )

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