Abstract
This dissertation studies different aspects of decision
making in individual account pension systems. I use data from
Chile, the pioneer country in adopting a fully-funded individual
account pension system as the main source of retirement savings for
workers.
The first chapter examines the relative importance of
health and wealth for the retirement decision in the context of a
mature individual account pension system. Overall, health factors
seem to be the most important determinant of retirement in Chile,
as opposed to recent research for the US that finds that wealth
prevails as the main determinant of retirement. This result might
be due to the fact that individual account pension systems are age
neutral and do not provide real economic incentives for retirement.
Besides contributing to knowledge about how pension system
structure might affect retirement behavior, results of this
research are useful for policymakers around the world considering
the adoption of a fully-funded individual account pension
system.
The second chapter investigates whether the child bonus
policy included in the recent Chilean pension reform generated
incentives for women to have children and whether it affected the
timing of birth. Results suggest that the child bonus policy
increases fertility preferences, but this effect cannot be
confirmed for births. Effects on fertility preferences, however,
vary for different groups of women. They seem to be stronger for
single women, as well as for higher order births. The child bonus
policy also seems to have shortened the time to a birth, especially
for single women and first births, even though these effects are
not statistically significant.
The third chapter investigates the role of financial
literacy and pension system knowledge on the retirement savings
investment choice of workers. I find that financial literacy and
especially pension knowledge present a statistically significant
and positive effect on the probability of making an active
investment decision, but that only financial literacy affects the
choice of investment fund itself. These results suggest that
investing in financial and pension system education might be an
important strategy for governments to motivate active investment
choices and provide workers with tools to make appropriate
investment decisions.
Table of Contents
CHAPTER ONE
RETIREMENT DECISION IN INDIVIDUAL ACCOUNT PENSION
SYSTEMS 1
I.
Introduction..............................................................................................................
2
II. Previous
Literature..................................................................................................
5
III. Institutional
Setting.............................................................................................
13
IV.
Data.....................................................................................................................
15
V.
Methodology.........................................................................................................
21
VI.
Results.................................................................................................................
23
VII.
Conclusion..........................................................................................................
33
References..................................................................................................................
35
CHAPTER TWO
CHILD BONUS AND FERTILITY - EVIDENCE FROM THE 2008
CHILEAN PENSION
REFORM....................................................................................................................................
68
I.
Introduction............................................................................................................
69
II. Related
Literature.................................................................................................
74
III. Child Bonus in
Chile...........................................................................................
76
IV. Empirical
Strategy...............................................................................................
79
V.
Data.......................................................................................................................
84
VI.
Results.................................................................................................................
87
VII.
Conclusion..........................................................................................................
91
References..................................................................................................................
93
Appendix..................................................................................................................
105
CHAPTER THREE
THE ROLE OF FINANCIAL LITERACY AND PENSION KNOWLEDGE
ON THE INVESTMENT OF RETIREMENT
SAVINGS............................................................................
107
I.
Introduction..........................................................................................................
108
II. Previous
Literature..............................................................................................
111
III. Chilean Pension
System.....................................................................................
114
IV.
Data...................................................................................................................
116
V. Empirical
Methodology.......................................................................................
120
V.1 Active investment
choice..............................................................................
120
V.2 Choice of type of pension
fund.....................................................................
121
VI. Empirical
Results...............................................................................................
122
VI.1 Active investment
choice.............................................................................
122
VI.2 Choice of type of pension
fund...................................................................
124
VII.
Conclusion........................................................................................................
125
References................................................................................................................
127
Appendix..................................................................................................................
137
About this Dissertation
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