Institutional Design of Pension Systems and Individual Behavior: How do Households Respond?

Work histories and workers’ failure to satisfy pension contribution requirements: A comparison of Mexico and Uruguay

“…For countries characterized by high levels of coverage, the works of Bertranou and Sánchez (2003) for Argentina, Arenas de Mesa, Behrman and Bravo (2004) for Chile, Forteza et al (2009) for Argentina, Chile, and Uruguay, and Chiliatto‐Leite (2017) for Brazil have estimated, in all cases, contribution densities above 50 per cent but below 60 per cent. Regarding countries characterized by low levels of coverage, a number of studies (Botello Peñaloza (2018) for Colombia; Herrerías and Zamarripa (2017) and Castañón and Ferreira (2017) for Mexico; Argueta, Bolaños Cámbara and Rivera (2015) for El Salvador; and OECD, IDB and World Bank (2014) for Peru) have systematically found lower contribution densities than in the first set of countries; on average, between 30 per cent and 50 per cent. Thus, the literature also indicates that the heterogeneities across Latin America in terms of contribution density seem to be comparatively minor in relation to the differences observed regarding contributory coverage.…”

“…Recent studies have shown that pension system coverage is low not only because many people never contribute, but because many others contribute only for part of their work history. Based on panel data, generally sourced from social security administrative records, studies have shown that, in some Latin American countries, frequent interruptions in the contribution history as well as considerable non-contributory periods are relatively common (Herrerías and Zamarripa, 2017;Apella, 2010;Forteza et al, 2009Forteza et al, , Álvarez et al, 2020. Analysis of how workers transit between contribution statuses (i.e., contributing or not contributing), which has important implications for the public policy debate, has helped provide a deeper understanding of pension system coverage in developing countries.…”