The 2008 Chilean pension reform: household financial decisions and gender differences

Abstract

We evaluate the effect of the 2008 pension reform in Chile, applying a difference-indifference estimation method to longitudinal survey data representative of the Chilean population. Our evidence suggests that those who started to receive a basic pension increased their debt more than their assets. We interpret this as an indicator of debt sustainability. The debt ratio increased significantly more for women, who may be particularly exposed to financial crises. The results raise concerns about the potential financial vulnerability of the population targeted by the reform, due to overindebtedness.

Effects of future pension benefits on pre‐retirement labor supply: Evidence from Chile

“…If so, my estimate would be a lower bound of the actual effect of the reform on labor supply. This assumption is reasonable as previous literature has shown that most of the population in the LSPS reported FPS scores that meet the eligibility criteria for the distributive tier (Behrman et al, 2011; Bucciol et al, 2022).…”

“…If so, my estimate would be a lower bound of the actual effect of the reform on labor supply. This assumption is reasonable as previous literature has shown that most of the population in the LSPS reported FPS scores that meet the eligibility criteria for the distributive tier (Behrman et al, 2011;Bucciol et al, 2022). Columns 2 to 5 present the fraction of population in the labor force, and within those employed, the fraction that contributes to the pension system, their average earnings, and the average number of hours per week.…”

“…Starting in 2010, the FPS criterion was replaced by the Puntaje de Focalizaci on Previsional (PFP) of the household, another score derived from the RHS (Direcci on de Estudios Previsionales, 2015). Unfortunately, a person's current vulnerability is not available in the LSPS before the reform, and in 2009 only 12% of the interviewed reported their FPS score (Bucciol et al, 2022). Since eligibility for the PBS and APS requires the knowledge of the PFP score at retirement age, I assume that workers with an expected low self-financed pension (below the PMAS) would be entitled to the benefits determined by the distributive tier.…”

“…Due to the structure of its pension system (an individual accounts system) and data availability, Chile is a reference case to study the effects of pension incentives on labor supply in developing economies. Most of the evidence at the micro level is based on structural modeling, evaluating the effects of pension reforms on welfare (Joubert, 2015; McKiernan, 2021), and gender disparities in benefits and access to pension (Joubert & Todd, 2020), while recent empirical reduced form estimation evaluated the role of the reforms in financial inclusion (Bucciol et al, 2022), extension of active working lives (Madero‐Cabib & Biehl, 2021), and the prospects of future pension benefits given counterfactual reforms (Madeira, 2021). On the empirical side, the closest paper to my work is Attanasio et al (2011).…”

Is Happiness Linked to Subjective Life Expectancy? A Study of Chilean Senior Citizens

“…The survey is comparable to the U.S. Health and Retirement Study (HRS); but, in contrast to the HRS, the EPS covers all adults, not just respondents over age 50 [37]. The questionnaire is widely used in Chile to diagnose, develop, and evaluate public policies [38].…”