Impact of the COVID-19 Pandemic on the Formal Labor Market and the Pension System in El Salvador

Nelson Fuentes, Gonzalo Aguilar and Camila Trillos

No 12490, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: Using an impact evaluation methodology for interrupted time-series and the IDB Pension Projection Model, this study estimates that the COVID-19 pandemic could have notably effects on the private pension system in El Salvador as a consequence of the relaxation of requirements to repay early withdrawals that was established in the context of the pandemic. This fact could negatively affect passive coverage rate, system incomes, short-run system surplus and replacement rates, generating an increase in the fiscal cost. The problems of the Salvadoran pension system are structural, and the COVID-19 pandemic has exacerbated them. Consequently, although it is possible to discuss policies to reduce these effects, it is necessary to frame this discussion in the context of a comprehensive reform of the system.

Keywords: COVID-19; Salvadoran pension system; Early Withdrawals; Impactevaluation; Pension reform (search for similar items in EconPapers)
JEL-codes: C22 G28 H55 J14 J32 J33 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-age
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:12490

DOI: 10.18235/0004523

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