Finance and Economics Discussion Series: The Effects of Social Security Privatization on Household Saving: Evidence from the Chilean Experience
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In recent years, a handful of countries have converted the financing of their social security systems from pay-as-you-go (PAYGO) to partial or full funding. Privatization is viewed as one way to insulate social security from the political and demographic pressures that currently threaten the financial stability of PAYGO systems. However, privatization would improve a nations situation only if such a reform increases domestic saving. In this paper I use evidence from Chile, where social security was privatized in 1981, to assess the impact of such a reform on household saving rates. I find that the reform provided a significant stimulus for saving among higher income households, increasing their saving rates by more than seven percentage points. This increase in saving at the household level translates into an increase in national saving of more than two percent of GDP.
Format:Paperback
Language:English
ISBN:1288721498
ISBN13:9781288721498
Release Date:February 2013
Publisher:Bibliogov
Length:38 Pages
Weight:0.19 lbs.
Dimensions:0.1" x 7.4" x 9.7"
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