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Distributional Impacts of Pension Policy in Argentina: Winners and Losers within and Across Generations
Author(s) -
Arza Camila
Publication year - 2006
Publication title -
international social security review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.349
H-Index - 28
eISSN - 1468-246X
pISSN - 0020-871X
DOI - 10.1111/j.1468-246x.2006.00248.x
Subject(s) - pension , social security , economics , pension system , overlapping generations model , context (archaeology) , falling (accident) , labour economics , finance , geography , market economy , medicine , environmental health , archaeology
Abstract The paper deals with the life‐cycle intra‐ and intergenerational income transfers operated by the pension system in Argentina by estimating the internal rates of return obtained by different generations and types of workers from their participation in the system. The empirical analysis confirms that earlier generations of workers benefited from higher social security returns than later generations, which retired under a matured system with large deficits. The worst‐affected cohorts were those born after 1920, particularly suffering from a social security crisis and falling real wages. For future generations retiring fully under the new mixed pension system, returns will more closely depend on financial market performance and the evolution of administration costs. Intragenerational transfers were also observed for all cohorts under study, as a result of the original system design as well as adjustments adopted during the implementation process. The real distributional impact of progressive benefit formulas could, however, be offset by state transfers to cover pension deficits and forward tax shifting in a context of unequal pension coverage.