Non%2DContributory%20Pensions%20and%20Savings%3A%0D%0AEvidence%20from%20Argentina

Working Papers

Non-Contributory Pensions and Savings: Evidence from Argentina


CODE: IDB-WP-629
AUTHOR(s): González-Rozada, Martín , Ruffo, Hernán
PUBLISHED: April 2016
LANGUAGE: English
RELATED TOPICS: Macroeconomics
DOWNLOAD FILE IN: English

Abstract:

This paper examines the effects of Argentina’s Plan de Inclusión Previsional (PIP), which changed the pension system in a way that generated a new noncontributory pillar, produced a huge expansion in pension coverage between 2005 and 2008 and a transfer of a vast amount of resources to households. Using a difference in differences methodology it is found that the PIP policy has reduced the incentives to work and to be in the labor force of those workers directly affected by the policy, mostly women of retirement age, but also some younger workers. The policy increases consumption of food and non-durable goods and health expenditure by beneficiary households. At the same time, the policy reduced incentives to save. Thus, the overall effect of the noncontributory pension scheme implies a substantial reduction in national savings.

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