PARC Working Paper Series

Document Type

Working Paper

Date of this Version



Behrman, Jere R., Maria Cecilia Calderon, Olivia S. Mitchell, Javiera Vasquez, and David Bravo. 2011. “First-Round Impacts of the 2008 Chilean Pension System Reform.” PARC Working Paper Series, WPS 11-01.


Chile’s innovative privatized pension system has been lauded as possible model for Social Security system overhauls in other countries, yet it has also been critiqued for not including a strong safety net for the uncovered sector. In response, the Bachelet government in 2008 implemented reforms to rectify this shortcoming. Here we offer the first systematic effort to directly evaluate the reform’s impacts, focusing on the new Basic Solidarity Pension for poor households with at least one person age 65+. Using the Social Protection Survey, we show that targeted poor households received about 2.4 percent more household annual income, with little evidence of crowding-out of private transfers. We also suggest that recipient household welfare probably increased due to slightly higher expenditures on basic consumption including healthcare, more leisure hours, and improved self-reported health. While measured short-run effects are small, follow-ups will be essential to gauge longer-run outcomes.


Basic Solidarity Pension, Chile, Expenditures, Health, Pension Fund Managers, Pensions, Poverty, Social Protection Survey, Social Security



Date Posted: 02 March 2011

This document has been peer reviewed.