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Pension reforms and employment.

Authors :
Edwards, AlejandraCox
Source :
International Economic Journal; Jun2005, Vol. 19 Issue 2, p305-319, 15p
Publication Year :
2005

Abstract

The Chilean social security reform became effective in November 1980, replacing a traditional pay-as-you-go system with a unified system based on a minimum required contribution towards an individual account. The reform lowered the combined contribution rates towards old age and disability pension and tightened the link between contributions and benefits increasing individuals' valuation of contributions. This paper offers estimates of ‘money's worth’ ratios for ‘typical contributors’ before and after reform, indicating that the post-reform money's worth of each peso of contribution increased substantially for all groups, and particularly for women. Using aggregate data on employment and output from 1960 to 2002, estimates imply that a 10% reduction in the payroll tax led to a 2% increase in employment, and to a 0.7 point expansion in labour force participation. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
10168737
Volume :
19
Issue :
2
Database :
Complementary Index
Journal :
International Economic Journal
Publication Type :
Academic Journal
Accession number :
16999977
Full Text :
https://doi.org/10.1080/10168730500080600