La Profesora Abstraída

Weblog of Michelle Dion, Assistant Professor in the Department of Political Science, at McMaster University. My blog has moved to michelledion.com/blog. Visit my other website.

Tuesday, October 17, 2006

Report on last spring's Fed conference on pension reform in Latin America

This report summarizes the papers and comments made at the conference on pension reform in Latin America held at the Atlanta Fed last March.

From pages 27-28:

Michelle Dion, assistant professor at the Sam Nunn School of International Affairs at the Georgia Institute of Technology in Atlanta, elaborated on some of the points made by James and proposed some alternative interpretations and solutions to gender inequities. While she agreed that women have made significant gains in lifetime benefits under the reformed systems and that raising the retirement ages in Chile and Argentina would reduce gender discrepancies, taking the gender equity perspective makes it is necessary to interpret the findings more cautiously. The new systems actually compound labor market inequities and such policy changes as raising women’s retirement age in Argentina and Chile might not be effective. Even if women were to work five years longer, the average married women’s replacement rates would still be less than
50%.

In addition, women do not disproportionately benefit from transfers. In Mexico, for example, the social quota (a government-paid benefit) only favors women by a very slight margin. Furthermore, most women do not contribute enough to earn these public transfers. World Bank data show that in Argentina, for example, women with university degrees must meet the thirty-year requirement to get the flat benefit, which means that the transfers do not actually materialize for most women. Incentives do exist for women to work longer, especially in Mexico, which would qualify them for the minimum pension guarantees. On the other hand, she said, evidence from the Chilean Social Protection Survey suggests that people overestimate their contribution rate, so incentives would have to be very strong to encourage women to stay in the labor market long enough to earn the minimum pension.

Intra-family transfers do not favor women. In fact, the reforms have made it harder for women to claim partner benefits because they require documentation, which many Latin American women do not have given the large number of common law marriages. The burden of providing evidence of cohabitating for a certain amount of time disproportionately affects lowincome women. From a sociological perspective, a reliance on intra-family transfers erodes women social citizenship rights and reinforces a male breadwinner bias that undermines women’s independence. Finally, relying on intra-family transfers may create a potential strain on the welfare of the extended families that support women in old age. In Mexico, for example, a large percentage of elderly women get most of their old age support from their extended family. Trade-offs are being made in terms of investment in human capital for younger members of the family.

Dion concluded that alternate reforms could be more appropriate and would help resolve some of the gender disparities. These reforms could address wage inequalities between men and women, invest in women’s human capital, and support women’s workforce participation.

I quote the report at length to remind myself of the points I made in March as I write up a paper for the conference volume now in October.

posted by Michelle @ 10:36 AM,