Pension schemes and labor supply in the formal and informal sector

Pension schemes and labor supply in the formal and informal sector This paper analyzes the participation path of workers in the formal and informal sectors throughout their lives and their pension eligibilities, as well as how the social security scheme can change the aforementioned participation path. High levels of informality have impacts on the benefits that workers receive, especially their pension benefits. I use Argentinean panel data from 1995 to 2008 to construct a structural discrete choice model which estimates the population’s labor path and their pension eligibilities. I find evidence that low-educated workers have difficulties to obtain a pension by the age of 65 and even by age 70. Policy experiments show that if the parameters are fixed as in the pay-as-you-go (PAYG) model, there is a slight reduction in the years worked in the formal sector and the percentage of workers who obtain a Full pension. If the pension requirements (minimum age and years contributing) are stricter, there is an increase in the years spent in the formal sector but it is not sufficient to achieve the benchmark level of pension coverage. If the requirements are looser, there is a reduction in the amount of time spent in formality to contribute up to the new threshold. IZA Journal of Labor Policy Springer Journals

Pension schemes and labor supply in the formal and informal sector

Loading next page...
Springer Berlin Heidelberg
Copyright © 2017 by The Author(s)
Economics; Labor Economics; Population Economics; Economic Policy; Social Policy
Publisher site
See Article on Publisher Site


You’re reading a free preview. Subscribe to read the entire article.

DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

Monthly Plan

  • Read unlimited articles
  • Personalized recommendations
  • No expiration
  • Print 20 pages per month
  • 20% off on PDF purchases
  • Organize your research
  • Get updates on your journals and topic searches


Start Free Trial

14-day Free Trial

Best Deal — 39% off

Annual Plan

  • All the features of the Professional Plan, but for 39% off!
  • Billed annually
  • No expiration
  • For the normal price of 10 articles elsewhere, you get one full year of unlimited access to articles.



billed annually
Start Free Trial

14-day Free Trial