Privatizing public pension systems - Lessons from Latin America

The major goal of this analysis is to examine the pros and cons of privatiz ing public pension schemes based on the Latin American experience. The stud y draws on evidence from four countries that have fully privatized their pu blic pension schemes (Chile, Mexico, Bolivia, and El Salvador) and four tha t have partially privatized (Argentina, Uruguay, Colombia, and Peru). Some evidence suggests that privatization is having positive economic effects, c ontributing to the development of financial institutions and the availabili ty of investment capital. It may also be increasing national savings rates and the rates of economic growth, but on these issues there is less agreeme nt. The benefits of privatization go primarily to high-wage male workers wi th few benefits for low-wage and female workers. As a result, privatization contributes to both income and gender inequality. Efforts to draw lessons for the US must take into consideration numerous political and economic dif ferences. (C) 2001 Elsevier Science Inc. All rights reserved.