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The Chilean Pension System at 25 Years: The Evolution of a Revolution

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  • Gregory J. Buchholz
  • Alberto Coustasse
  • Patricio Silva
  • Peter Hilsenrath

Abstract

The 1981 reform of the Chilean pension system was revolutionary at its time. It was the first instance of a mature public Pay-As-You-Go social security system being converted into a mandatory defined contribution system managed by the private sector. This paper contends that a unique confluence of events were responsible for this change. The rise of a dictatorship in Chile, a struggling public retirement system, and a cadre of Chicago oriented economists determined to make Chile a model free market neoliberal economy. This was later followed by the Washington Consensus and the promotion of Chilean reform by the World Bank. This paper analyzes the Chilean reform and its subsequent development; evaluating it on both efficiency and equity grounds. While the evidence for efficiency gains is mixed there is little doubt that equity has suffered under the new system. Nevertheless, it continues to evolve and equity concerns are increasingly being addressed.

Suggested Citation

  • Gregory J. Buchholz & Alberto Coustasse & Patricio Silva & Peter Hilsenrath, 2008. "The Chilean Pension System at 25 Years: The Evolution of a Revolution," Journal of Economic Issues, Taylor & Francis Journals, vol. 42(3), pages 633-647, September.
    • Handle: RePEc:mes:jeciss:v:42:y:2008:i:3:p:633-647
    DOI: 10.1080/00213624.2008.11507171
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    Cited by:

    1. Luciano Fanti, 2012. "PAYG pensions and fertility drop: some (pleasant) arithmetic," Discussion Papers 2012/146, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

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