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The ex-ante effects of non-contributory pensions in Colombia and Peru

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  • Javier Olivera

    (University College Dublin, Geary Institute and PEARL Institute for Research on Social Inequality, University of Luxembourg)

  • Blanca Zuluaga

    (Department of Economics, Icesi University)

Abstract

The aim of this paper is to study the ex-ante effects of the implementation of a Non Contributory Pension (NCP) program in Colombia and Peru. Relying on household survey data, we simulate the potential impact of the transfer on poverty, inequality, fiscal cost, and the probability of affiliation to the contributory pension system. This last effect is the most direct behavioral effect one can expect from the implementation of a NCP scheme. For the behavioral response we estimate a Nested Logit Model. Our results show that a NCP in Colombia and Peru contributes to the reduction of poverty and inequality among the elderly, particularly in rural areas at affordable fiscal costs. Furthermore, there is not a large impact on the probability of affiliation to contributory pensions when the program is targeted to the poor (and extreme poor), with the exception of Peruvian women for whom there is always a sizeable reduction on their probability of affiliation to the contributory pension system.

Suggested Citation

  • Javier Olivera & Blanca Zuluaga, 2013. "The ex-ante effects of non-contributory pensions in Colombia and Peru," Working Papers 299, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2013-299
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    Cited by:

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    2. Ce Shen & Jessica Johnson & Zhenhe Chi & John B. Williamson, 2020. "Does a universal non‐contributory social pension make sense for rural China?," International Social Security Review, John Wiley & Sons, vol. 73(2), pages 3-26, April.
    3. Javier Olivera & Jhonatan Clausen, 2014. "Las características del adulto mayor peruano y las políticas de protección social," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 37(73), pages 75-113.
    4. Jorge Alonso & Catalina Amuedo-Dorantes & Laura Juárez, 2016. "The Effect of Non-contributory Pensions on Saving in Mexico," IDB Publications (Working Papers) 95976, Inter-American Development Bank.
    5. José Luis Iparraguirre, 2020. "Economics and Ageing," Springer Books, Springer, number 978-3-030-29019-1, January.
    6. Jaime Flórez Bolanos, 2020. "Los efectos tributarios en los sectores de la economía colombiana," Apuntes del Cenes, Universidad Pedagógica y Tecnológica de Colombia, vol. 39(70), pages 141-166, July.
    7. Rafael Novella & Javier Olivera, 2017. "Cognitive functioning among poor elderly persons: evidence from Peru," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-13, December.

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    More about this item

    Keywords

    Non-contributory pensions; social security; old-age; poverty.;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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