UM16-18 - The Effects of Means-Tested Minimum Old-Age Benefits in Poverty Rates and Well-Being: Studying the 2008 Chilean Pension ReformsItalo Lopez Garcia and Andres Otero Correa
Chile initiated in 1981 a privately managed individual-account pension system that inspired similar reforms in many Latin American countries and that has been considered as a possible model for the Social Security in the United States. After 30 years in place, the Chilean pension system has been criticized for replicating existing inequalities in labor markets and increasing the risk of old-age poverty; for achieving lower levels of coverage; and for providing low pension benefits. Aiming at guaranteeing a minimum level of consumption upon retirement, preventing old-age poverty and reducing gender inequalities, in 2008 Chile reformed the Pension System widening the welfare tier and improving the contributory tier through a means-testing scheme. This proposal examines the impact of the 2008 Chilean pension on economic security, poverty rates, and well-being, using a version of the difference-in-difference estimator that assesses the effects of the reform through exogenous changes in pension wealth.