تامین اجتماعی و انباشت ثروت در اقتصادهای در حال توسعه: شواهد از سال 1981 اصلاحات شیلی

Wealth holdings are particularly important in developing economies as they allow individuals to insure themselves against income shocks in the absence of developed financial markets. In this paper, we test whether the existence of future social security benefits impacts wealth holdings by using the 1981 Chilean social security reform. Our estimates are based on the EPS 2004, which contains detailed data on wealth holdings (assets and liabilities) and social security account balances. By means of different econometric methods, we find no impact of social security on wealth accumulation, with the exception of poorer individuals. In that case, each additional peso in social security wealth depresses other types of wealth by almost 0.1 pesos, mainly in regard to real estate.

People accumulate assets for two main reasons: to smooth consumption over their life cycle and to buffer unexpected income/expense shocks. In developing economies, wealth accumulation is particularly important as people usually do not have a large set of instruments available to insure themselves against income shocks, contrary to developed economies. One element that should be considered in the study of wealth accumulation is the social security system. There is some evidence, generally focusing on developed economies, showing potential negative impacts of the PAYG social security systems on wealth accumulation. In that case, social security programs might leave individuals less protected against income/expense shocks. The impact of social security on wealth accumulation is not clear. On the one hand, views in theories are contradictory. The life cycle model predicts that larger future benefits to be received from the social security system upon retirement will increase current consumption, and thus depress savings and asset accumulation. Furthermore, if future social security benefits are perceived as good substitute to future wealth, the impact on current wealth might be great. Conversely, the dynastic family set-up predicts that greater social security benefits are associated with higher future taxes and, therefore, wealth accumulation does not vary. On the other hand, the empirical evidence, which is mainly obtained from developed economies, is also inconclusive. The above discussion relates to the “Pay-as-you-go” (PAYG) social security system, which is one of the social security designs most used around the world. However, individual account (IA) social security systems are becoming a subject of increasing interest as countries are switching from PAYG systems to IA systems. The relation between the IA system and wealth accumulation is also unclear and this lack of evidence is a problem faced by policy agents when analyzing the effects of reforming the PAYG social security system through a possible privatization. Thus, evidence on the impact of the PAYG and IA system on wealth accumulation is currently an important input for policy makers in developing economies. In this study, we analyze the impact of the PAYG system and the IA system on individual wealth accumulation by providing evidence from Chile. We focus on Chile because it was one of the first countries switching from a PAYG system to an IA system. Furthermore, the 1981 Chilean social security reform allowed some individuals to remain affiliated to the old PAYG system while other individuals switched to the IA system. Hence, in Chile, individuals affiliated to the old PAYG system coexist with individuals affiliated to the IA system. This characteristic allows us to disentangle the impact of both types of social security on wealth accumulation by using Chilean micro-data. On the other hand, we have a rich dataset available that includes information on an extensive number of different instruments to accumulate wealth. While there are a large number of surveys available in Chile since the social security reform, the particular survey we use is the unique survey containing information both on the social security system and the wealth accumulation.1 Initially, we run OLS regressions and later we provide IV regressions to correct for the potential self-selection of individuals between social security systems. Next, we provide estimates by sources of wealth and later we study how our results differ by socioeconomic characteristics of individuals. This paper is developed in the following way: Section 2 makes a brief review of the theory and the empirical evidence on the topic. Section 3 discusses the Chilean historical background while Section 4 discusses the data and the empirical strategy. Section 5 discusses the results and Section 6 concludes.

We can summarize our results as follows. Firstly, there is consistent evidence indicating no impact of IA social security wealth on other types of wealth holdings. This result holds true for different definitions of wealth and for different socioeconomic groups of individuals. A similar conclusion holds for the PAYG social security wealth with the exception of the group of poorer individuals, which, in our case, is approximated by individuals with no more than primary education. This first result, for example, no impact of social security wealth on other types of wealth holdings, might indicate that social security wealth is a poor substitute for other types of wealth. A second result is that the impact of PAYG social security wealth is economically and statistically significant if we focus on the group of poorer individuals, as it depresses by almost 0.1 pesos other types of wealth holdings per each peso in the PAYG system. To be more precise, the result occurs in that group because PAYG social security depresses their accumulation of real estate wealth. Note that in fact, it is not surprising that social security wealth depresses wealth accumulation by impacting real estate since a larger fraction of people reports real estate wealth holdings (see Table 7), compared to other categories of wealth holdings. Thus, if any effect would exist, we might expect that the impact occurs in real estate holdings.Note that the effect arises in the case of the PAYG system while we found no effect in that group in the case of the IA system. This result might be explained, on the one hand, because the PAYG seems to be more generous to poorer individuals compared to the rest of the population. In fact, note that the ratio of average pensions of individuals with less than primary education vis-à-vis the average job income of individuals with less than primary education in 2004 was approximately 14 1.93. The ratio is similar for individuals with secondary education (1.02) and for individuals with tertiary education (1.04). Thus, the PAYG system provided significant redistribution to poorer (less educated) individuals. On the other hand, poorer individuals seem to be more credit-constrained than other individuals. In fact, individuals with less than primary education hold, on average, a fraction of debt to job income approximately equal to 15% while the same ratios for individuals with secondary and tertiary education are around 22% and 25%, respectively. Borrowing constraints are generally associated with precautionary savings. However, future generous benefits in the PAYG system in the case of poorer individuals might require less precautionary savings and decrease wealth accumulation. Our results have some important policy implications. Firstly, greater social security benefits depress wealth accumulation only in the case of less educated individuals, but not in the rest of the population. This is an important implication in developing economies where precautionary savings allow people to insure themselves against negative income shocks occurring before retirement. If we would have found that social security wealth depresses asset accumulation, we may have encountered a situation in which individuals become unprotected against negative job income shocks before retirement if social security benefits are increased. Our results generally discard this situation with the exception of less educated (poorer) individuals, who may react by means of a significant decrease in their wealth holdings as a PAYG social security system is implemented. Note that the negative impact of the PAYG system on wealth holdings of less educated individuals seems to be related to the generous benefits they receive, which implies that the design of the PAYG system might be the key to our result. This result has two contradictory sides: on the one hand, poorer individuals receive high benefits upon retirement but on the other hand, these high benefits leave individuals unsecured before retirement against income shocks as it depresses wealth holdings. Secondly, our results indicate that switching from a PAYG system to an IA system would have only minor impacts on wealth accumulation because in general, neither of these systems impact wealth holdings considerably. This is, of course, a relevant conclusion for developing economies that are considering switching from a PAYG system to an IA system in the future.