| Resumen: |
Argentina had traditionally enjoyed one of the highest elderly coverage rates in Latin America. However, since the mid-1990s coverage rates started a steady decline, especially for low income workers. In response, the Argentine government implemented a series of sweeping reforms in the mid-2000s. Central to these reforms was a program known as the "Moratorium" which allowed workers of retirement age to receive a pension regardless of whether they had completed the full 30 years of required social security contributions through formal employment. The difference between the amount of completed contributions and the 30-year benchmark would be reconciled by discounting their “debt” from their pension benefit (with a substantial reduction). In two years, two million pension recipients were added and elderly coverage rate rose from 68% in 2003 to nearly 90% in 2010. This paper studies the labor market effects of this reform.We find that the moratorium generated a fall in employment of 5 percentage points (pp) and 4.5pp for men age 65-69 and women age 60-64 respectively. We also find that it generated a 2.5 pp fall in formal employment among women, indicating that the moratorium caused women in formal jobs to retire, when they would have otherwise continued to contribute to the system. Similarly, we observe a large increase of the share of workers in the informal sector receiving a pension, implying that a substantial fraction of the benefits of the moratorium went to active workers that continued working above the eligibility age outside the formal sector. |
