Learning from the privatization of the Social Security pension system in Chile: Macroeconomic effects, lessons and challenges

Chile offers an interesting case study because not only it has one of the oldest and most comprehensive pension systems in Latin America but also it provides a fascinating example to analyze the economic effects of switching from a pay-as-you-go to a fully funded pension system.;Chapter 1.0 presents a detail description and evaluation of the privatization of the pension system and analyzes five of the most debated issues related to the Chilean reform: (i) the population coverage; (ii) the administrative costs; (iii) the development of the financial and other related markets; (iv) the impact of the pension reform on savings; and (v) the redistributive effects of the private pension system.;Chapter 2.0 investigates changes in saving behavior in an overlapping generation economy of two periods with uncertainty, annuities, a fully funded pension system, and explicitly considering the gender factor, when individuals (males and females) are assumed to differ in the probability of dying. An application of this model to the Chilean economy confirms that female pension benefits will be lower than male benefits under the fully funded scheme, due to the explicit incorporation of different life expectancy factors by sex into the estimation of the benefits.;Chapter 3.0 analyzes the determinants of private savings in Chile (1974-95). The empirical findings suggest that the conventional assumption on the positive direct impact of the privatization of the pension system on private savings may not hold, as there is not evidence to support that assumption from the Chilean case. The econometric evidence suggests that a stable sociopolitical environment may have helped significantly to the high rates of private savings in 1990-95.;This dissertation focuses on the privatization of the Chilean pension system, especially its macroeconomic effects, lessons and challenges.;Social security pension reforms have become an important social policy issue in Latin America and in other developing as well as developed countries, and the Chilean privatization reform is probably the most influential and debatable pension reform model. This dissertation, therefore, is significant in deepening the study and reaching findings on several crucial issues in the ongoing theoretical, empirical and policy debates.