Coverage of Fully-Funded Social Security Programs in Chile, Colombia and Mexico
Chile, Colombia, and Mexico each have fully-funded, defined-contribution social security systems, yet there are significant differences in system design and incentive that may affect individuals' participation. The research team compared the differences of individual coverage in the three countries' systems.
The research team considered the different macroeconomic paths and labor market structures of each country, especially those regarding the informal labor sector. Micro-data is also used to examine how personal and household characteristics affect the social security system participation.
The study revealed that the low coverage rates of each social security system is strongly related to economic cycles and the lack of compulsory contributions to the system by self-employed workers. We find a higher probability to contribute to the system for men, head of households, higher number of household members, married, and higher levels of education. Also, females with high levels of education are more likely to contribute to the social security system.
Emma Aguila, Orazio Attanasio (UCL), and Ximena Quintanilla (UCL)