Oxford Bulletin of Economics and Statistics (2022)
Matsuoka Hideaki
By Madeira Carlos
Journal of International Money and Finance (2022)
Chile implemented pension withdrawals during the pandemic at a much larger scale than other OECD countries. Estimating a life cycle model with survey data, I find that households consume a significant fraction of their non-contributory pension wealth, implying a tradeoff between improving public pensions and increasing savings. Counterfactual simulations show that the pandemic pension withdrawals may decrease the future savings rate by 1.7%. Furthermore, policy reforms may decrease the aggregate savings rate by 0.2% for each percentage point of solidarity tax from current workers. The solidarity taxes increase substantially the pension income of poor retirees, but their effects decline over time.
Madeira C. (2022) The impact of the Chilean pension withdrawals during the Covid pandemic on the future savings rate. Journal of International Money and Finance.