The Latvian NDC Scheme: Success Under a Decreasing Labor Force

Edward Palmer and Sandra Stabina

No 136546, Social Protection Discussion Papers and Notes from The World Bank

Abstract: Latvia introduced a nonfinancial defined contribution (NDC) scheme in 1996 as it transitioned to a market economy. Despite a 20 percent decline in the working-age population from 1994?2016, the ratio of contributors to old-age pensioners rose from 1.6 to 2.1 given a steady increase in formal labor force participation and 5-6 percent real per capita wage growth. Projections show that long-term financial balance will be maintained through 2070, despite the threat of a projected 50 percent decline in the working-age population. Budgeted reserves will cushion the continued transition into a two-pillar public pension scheme. Latvia?s most important long-term policy challenge is to create the domestic investments and economic growth to reward younger workers for remaining in the country.

Keywords: Social Development&Poverty; Labor&Employment Law; Adolescent Health; Labor Markets; Demographics (search for similar items in EconPapers)
Date: 2019-04-01
New Economics Papers: this item is included in nep-age and nep-cis
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:hdnspu:136546

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