Implicit Redistribution within Argentina's Social Security System after the 2008 reform: a micro-simulation exercise

PEDRO E. MONCARZ

Montevideo

Congreso; XXVII Jornadas de Economía, Banco Central del Uruguay; 2012

Banco Central del Uruguay

We assess redistribution in the Argentinean pension and unemployment insurance programs on a lifetime basis. Using household surveys, we simulate lifetime declared labor income and flows of contributions and benefits, and compute the expected present values of income and net flows. On the one hand, we find that the PAYG-DB system in Argentina appears to be regressive, specially in the case of women working in the private sector. On the other hand, under the individual account option available until the reform of 2008, Social Security is regressive for private workers but not for those in the public sector. If income from informal jobs are also accounted for, the system becomes slightly progressive. A weak enforcement of the law contributes to make the system less regressive or even progressive. Finally, assuming the removal of the informal labor market, the system becomes almost neutral, whether considering the PAYG option or of individual accounts, even showing a small level of progressivity.