Effects of Social Security Privatization on Household Saving: Evidence from the211 Chilean Experience

摘要

In recent years, a handful of countries have converted the financing of their211u001esocial security systems from pay-as-you-go (PAYGO) to partial or full funding. 211u001ePrivatization is viewed as one way to insulate social security from the political 211u001eand demographic pressures that currently threaten the financial stability of 211u001ePAYGO systems. However, privatization would improve a nations situation only if 211u001esuch a reform increases domestic saving. In this paper I use evidence from Chile, 211u001ewhere social security was privatized in 1981, to assess the impact of such a 211u001ereform on household saving rates. I find that the reform provided a significant 211u001estimulus for saving among higher income households, increasing their saving rates 211u001eby more than seven percentage points. This increase in saving at the household 211u001elevel translates into an increase in national saving of more than two percent of 211u001eGDP.