Working Papers

Non-Contributory Pensions and Savings: Evidence from Argentina

AUTHOR(s): González-Rozada, Martín , Ruffo, Hernán
PUBLISHED: April 2016
RELATED TOPICS: Macroeconomics


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.

Related Research by JEL Codes:
(or click here to find research by JEL Codes)
  • Firm Productivity as an Engine of Saving
    Technical Notes
    IDB-TN-963 - April 2016

    This technical note considers whether low savings in Latin America and the Caribbean may result from low productivity rather than vice versa. Economies with low TFP growth tend to be economies in which returns to investments are low, with low saving rates as well. In that sense, low TFP growth, by providing weaker incentives to save, could be another determinant of the low saving rates observ ... (View publication)

  • A Comparison of Saving Rates: Micro Evidence from Seventeen Latin American and Caribbean Countries
    Working Papers
    IDB-WP-602 - August 2015

    Using micro data on expenditure and income for 17 Latin American and Caribbean (LAC) countries, this paper presents stylized facts on saving behavior by age, education, income and place of residence. Counterfactual saving rates are computed by imposing the saving behavior, the population distribution or the income distribution of two benchmark economies (the United States and Korea). The resu ... (View publication)

  • Do the Rich Save More in Latin America?
    Working Papers
    IDB-WP-588 - April 2015

    This paper follows two strategies to address whether the rich save more. First, the paper implements a two-stage procedure in which the household’s lifetime income is instrumented with the education level of the household head and the education level of his/her partner. Second, using information on home assets, the paper constructs a wealth index. There is evidence that the richest households save ... (View publication)

Hello, Welcome to the IDB!

Please join our mailing list by simply entering your email below.