A BEJEAP Contributions article.

Abstract

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 nation's 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 net of social security household saving; increasing household saving rates between 5 and 10 percentage points.

Submitted: January 30, 2002 · Accepted: August 14, 2002 · Published: August 30, 2002

Originally published in Contributions to Economic Analysis & Policy.

Recommended Citation

Coronado, Julia Lynn (2002) "The Effects of Social Security Privatization on Household Saving: Evidence from Chile," Contributions to Economic Analysis & Policy: Vol. 1 : Iss. 1, Article 7.
Available at: http://www.bepress.com/bejeap/contributions/vol1/iss1/art7