Dynamic Incentives in Retirement Earnings-Replacement Benefits

Andrés Dean, Sebastian Fleitas and Mariana Zerpa
Additional contact information
Mariana Zerpa: University of Chile and IZA

The Review of Economics and Statistics, 2024, vol. 106, issue 3, 762-777

Abstract: We analyze dynamic incentives in pension systems created by the use of a small set of final years of earnings to compute benefits. Using social security records and household surveys from Uruguay, we show that self-employed workers and some employees of small firms respond to these incentives by increasing reported earnings in the benefit calculation window. We find evidence that suggests that these responses are explained by changes in earnings reporting and not in total earnings or labor supply. Back-of-the-envelope calculations indicate that this behavior increases the cost of pensions by about 0.2% of the GDP.

Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1162/rest_a_01193
Access to PDF is restricted to subscribers.

Related works:
Working Paper: Dynamic Incentives in Retirement Earnings-Replacement Benefits (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tpr:restat:v:106:y:2024:i:3:p:762-777

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().