Redistribution, insurance and incentives to work in Latin-American pension programs

Alvaro Forteza*, Guzmán Ourens

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

14 Citations (Scopus)


We present a new database of social security indicators for 11 Latin-American countries designed to show how much they promise to pay in return to contributions. These are based on micro-simulations according to existing norms. We use response-surface analysis to characterize simulation results. Our results indicate that most programs are progressive. The length of service (LOS) has a strong impact on the expected returns to contributions. In several programs, the expected rates of return exhibit striking discontinuities in the LOS, mostly due to vesting period conditions. This implies these programs may be exacerbating income risk.
Original languageEnglish
Pages (from-to)337-364
JournalJournal of Pension Economics and Finance
Issue number3
Publication statusPublished - Jul 2012
Externally publishedYes


  • incentives to work
  • insurance
  • Internal rate of return
  • redistribution
  • replacement rate


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