Public pensions, economic development, and the labor force participation of older adults in Latin America in 1990–2010

© Invalid date by the Authors. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution -Noncommercial 4.0 International License (CC-by the license) ( https://creativecommons.org/licenses/by-nc/4.0/ )

Download PDF

Cite

XML

Abstract

This paper investigates the coverage of public pension programs in Latin America and discusses the relation between economic development, the existence of public pension programs, and elderly labor force participation. The paper presents stylized facts about the labor force by age and the connection between economic development and labor supply using aggregated data from 23 Latin American countries. The second part of the paper uses regression models to investigate the effects of economic development and social security system on the labor force participation of the older adults in 23 Latin American countries over the period 1990–2010. The results show that in lower income Latin American countries, most men remained in the labor force until age 65 or beyond and that with economic development and related changes, the labor force participation of older men, even those aged 55–59, starts to decline. Overall, the paper provides some insight on the evolution of labor supply patterns in less developed economies with rising income, changes in population age structure, shifts in occupational composition, and development in public pension programs.

Keywords

labor force participation

economic development

older adults

elderly

public pensions

social security

retirement

Latin America

References

[1]

Aguila E (2014). Male labor force participation and social security in Mexico. Journal of Pension Economics & Finance, 13(2): 145–171. https://doi.org/10.1017/S1474747213000292.

[2]

Bloom DE and McKinnon R (2010). Social security and the challenge of demographic change. International Social Security Review, 63(3–4): 3–21. https://doi.org/10.1111/j.1468-246X.2010.01368.x.

[3]

Bloom DE, Canning D, Fink G, et al. (2009). The effect of social security reform on male retirement in high and middle income countries. PGDA Working Paper No. 48. Program on the Global Demography of Aging. Boston, MA, USA: Harvard School of Public Health. https://core.ac.uk/download/pdf/6617064.pdf.

[4]

Bongaarts J (2004). Population aging and the rising costs of public pensions. Population and Development Review, 30(1): 1–23. https://doi.org/10.1111/j.1728-4457.2004.00001.x.

[5]

Burtless G and Quinn J (2001). Retirement trends and policies to encourage work among older Americans. In: Budetti P, Burkhauser RV, Gregory JM, et al. (editors). Ensuring health and income security for an aging workforce –. Kalamazoo, MI, USA: W.E. Upjohn Institute for Employment Research. pp. 375–415. https://doi.org/10.17848/9780880994668.ch18.

[6]

Clark RL and Anker R (1990). Labor force participation rates of older persons: An international comparison. International Labor Review, 129(2): 255–271.

[7]

––––– (1993). Cross-national analysis of labor force participation of older men and women. Economic Development and Cultural Change, 41(3): 489–512. https://doi.org/10.1086/452029.

[8]

Clark RL, York A and Anker R (1999). Economic development and labor force participation of older persons. Population Research and Policy Review, 18(5): 411–433. https://doi.org/10.1023/A:1006337814581.

[9]

Coile CC (2015). Economic determinants of workers’ retirement decisions. Journal of Economic Surveys, 29(4): 830–853. https://doi.org/10.1111/joes.12115.

[10]

Contreras D, de Mello L and Puentes E (2011). The determinants of labor force participation and employment in Chile. Applied Economics, 43(21): 2765–2776. https://doi.org/10.1080/00036840903373303..

[11]

Costa D (1998). The evolution of retirement: An American economic history, 1880-1990. Chicago, IllinoisL, USA: University of Chicago Press. https://doi.org/10.7208/chicago/9780226116228.001.0001.

[12]

Cotlear D (2011). Population aging: Is Latin America ready? In: Cotlear D (editor). Population aging: Is Latin America ready? Washington, DC, USA: The World Bank. p. 1–42.

[13]

de Carvalho Filho IE (2008). Old-age benefits and retirement decisions of rural elderly in Brazil. Journal of Development Economics, 86(1): 129–146. https://doi.org/10.1016/j.jdeveco.2007.10.007.

[14]

Dingemans E, Henkens K and Vvan Solinge H (2016). Working beyond retirement in Europe: An investigation of individual and societal determinants using share. Netspar Discussion Paper No. 06/2016-022. https://doi.org/10.2139/ssrn.2796625.

[15]

James E and iapr: Ehrenberg RG and Smith RS (2016). Modern labor economics: Theory and public policy. 13th ed. New York, NY, USA: Routledge.

[16]

Finlay J And Fink G (2011). Social security reform and male labor force participation around the world. Boston College Center for Retirement Research Working Paper No. 2011-12. http://dx.doi.org/10.2139/ssrn.1857040.

[17]

Gordo LR and Skirbekk V (2013). Skill demand and the comparative advantage of age: Jobs tasks and earnings from the 1980s to the 2000s in Germany. Labour Economics, 22: 61–69. https://doi.org/10.1016/j.labeco.2012.09.003.

[18]

Gruber J and Wise D (1999). Introduction and summary. Social security and retirement around the world. In: Gruber J and Wise D (editors). Social security and retirement around the world. Chicago, Illinois, USA: The University of Chicago Press. p. 1–30.

[19]

––––– (2004). Introduction and summary. Social security and retirement around the world: Micro-estimation. In: Gruber J and Wise D (editors). Social security and retirement around the world: Micro-estimation. Chicago, Illinois, USA: The University of Chicago Press. p. 1–40.

[20]

––––– (2010). Introduction and summary. Social security programs and retirement around the world: The relationship to youth unemployment. In: Gruber J and Wise D (editors). Social security programs and retirement around the world: The relationship to youth unemployment. Chicago, Illinois, USA: The University of Chicago Press. p. 1–46. https://doi.org/10.7208/chicago/9780226309507.001.0001.

[21]

He C (2017). Youth unemployment is a huge problem for Latin America: How entrepreneurship could be a solution with the right P3 environment. New York, NY, USA: Concordia. http://www.concordia.net/newsroom/blog/youth-unemployment.

[22]

Herranz D (2016). Youth unemployment is a huge problem for Latin America. Here’s how to solve it. World Economic Forum on Latin America. . 2016 June 16–17; Medelin, Colombia. https://www.weforum.org/agenda/2016/06/youth-unemployment-is-a-huge-problem-for-latin-america-here-s-how-to-solve-it/.

[23]

Hurd M and Rohwedder S (2011). Trends in labor force participation: How much is due to changes in pension? Journal of Population Aging, 4(1–2): 81–96. https://doi.org/10.1007/s12062-011-9042-8.

[24]

ILOSTAT (2016). International Labor Organization Labour Statistics. Genebra, Switzerland: International Labour Organizaiton. https://www.ilo.org/ilostat

[25]

James E and Cox-Edwards A (2005). Do individual accounts postpone retirement: Evidence from Chile. Michigan Retirement Research Center Research Paper No. WP 2005-098. https://ssrn.com/abstract=1093712.

[26]

Kaushal N (2014). How public pension affects elderly labor supply and well-being: Evidence from India. World Development, 56: 214–225. https://doi.org/10.1016/j.worlddev.2013.10.029.

[27]

Lam M, Leibbrandt G and Ranchhod V (2006). Labor force withdrawal of the elderly in South Africa. In: Cohen B and Menken J (editors.),. Aging in Sub-Saharan Africa: Recommendation for furthering research, (pp. 214–249). National Research Council (US) Committee on Population. Washington, DC, USA: National Academies Press. p. 214–249.

[28]

Larsen M and Pedersen PJ (2013). To work, to retire—or both? Labor market activity after 60. IZA Journal of European Labor Studies, 2: 21. https://doi.org/10.1186/2193-9012-2-21.

[29]

Levy S and Schady N (2013). Latin America’s social policy challenge: Education, social insurance, redistribution. The Journal of Economic Perspectives, 27(2): 193–218. https://doi.org/10.1257/jep.27.2.193.

[30]

Mason A, Lee R and Lee S-H (2010). Population dynamics: Social security, markets, and families. International Social Security Review, 63(3–4): 145–175. https://doi.org/10.1111/j.1468-246X.2010.01373.x.

[31]

Melguizo Á, Bosch M and Pages-Serra C (2017). Better pensions, better jobs: Status and alternatives toward universal pension coverage in Latin America and the Caribbean. Journal of Pension Economics and Finance, 16(2): 121–143. https://doi.org/10.1017/S1474747215000190.

[32]

Mesa-Lago C and Bertranou F (2016). Pension reforms in Chile and social security principles, 1981–2015. International Social Security Review, 69(1): 25–45. https://doi.org/10.1111/issr.12093.

[33]

Nava-Bolaños I and Ham-Chande R (2014). Determinantes de la participación laboral de la población de 60 años o más en México (Spanish) [Determinants of the labor participation of the population of 60 years or more in Mexico]. Papeles de Población, 20(81): 59–87.

[34]

OECD, CAF and ECLAC (2016). Latin American economic outlook 2017: Youth, skills and entrepreneurship. Paris, France: OECD Publishing. http://dx.doi.org/10.1787/leo-2017-en.

[35]

OECD (1998). Work Force Ageing in OECD Countries Employment Outlook. Paris: Organisation for Economic Co-operation and Development.

[36]

Profeta P (2002). Aging and retirement: Evidence across countries. International Tax and Public Finance, 9(6): 651–672. https://doi.org/10.1023/A:1020907029267.

[37]

Queiroz BL (2008). Retirement incentives: Pension wealth, accrual and implicit tax. Well-Being and Social Policy, 4(1): 73–94.

[38]

Rofman R and Carranza E (2005). Social security coverage in Latin America. Social Protection Discussion Paper Series No. 0523. Washington, DC, USA: The World Bank Press.

[39]

United Nations (2015). World population prospects: The 2015 revision. Key findings and advance tables. New York, NY, USA: United Nations Publications.

[40]

Wise DA (2010). Facilitating longer working lives: International evidence on why and how. Demography, 47(1): S131–S149. https://doi.org/10.1353/dem.2010.0000.

[41]

––––– (2004). Social security provision and the labor force participation of older workers. Population and Development Review, 30: 176–205. http://www.jstor.org/stable/3401468.

[42]

––––– (1997). Retirement against the demographic trend: More older people living longer, working less, and saving less. Demography, 34(1): 83–95. https://doi.org/10.2307/2061661.

[43]

World Bank (2016). World development indicators 2016. Washington, DC, USA: World Bank Group. https://openknowledge.worldbank.org/handle/10986/23969.

Previous article in this issue

Next article in this issue

International Journal of Population Studies, Electronic ISSN: 2424-8606 Print ISSN: 2424-8150, Published by AccScience Publishing