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Public pensions, economic development, and the labor force participation of older adults in Latin America in 1990–2010

the labor force supply of older workers in South Africa focusing on possible effects
of the public pension system on retirement. The South African pension system had
a significant impact on reducing poverty levels and overall socioeconomic levels
of the more disadvantaged population (Lam, Leibbrandt and Ranchhod, 2006).
However, Lam et al. (2006) found negative impacts of its pension system on the labor
supply of older workers, showing that age of pension eligibility is associated with
high retirement rates. James and Cox-Edwards (2005) use the privatization of the
pension system in Chile in 1982 to test whether it created expected incentives to later
retirement. They found strong evidence of the effects of the new system on the labor
supply of older workers: Restriction to early retirement and actuarially fair adjustment
of benefit for later retirement explained the increase in labor force participation.
2 Data and Methods

2.1 Data sources
As no single data source could provide sufficient information to fulfill our research
goals, this paper uses the aggregated data from the World Bank, the International Labor
Organization, and other sources. The main limitation to work with Latin American
data is the availability of completeness of information for all countries for a very long
period of time. This study concentrates on the more recent period because most data
necessary to perform analysis were available. Table 1 lists the variables used in the
analysis and data sources used to construct each of the indicators. Per capita GDP,
educational attainment, and employment rate were obtained from the World Bank
(World Bank, 2016), the population age structure and the percentage urban (i.e., the
proportion of urban population) were from the United Nations (United Nations, 2015),
and the data of characteristics of the national social security programs and pension
coverage of each Latin American country were from various published documents or
materials published by the United States Social Security Administration and the World
Bank. Information on pension coverage was also obtained in a publication by Rofman
and Carranza (2005).

Table 1. Variables and data sources
Variables Source Period
Dependent Variable
Labor Force Participation Rates (in %) International Labor Organization 1990–2010
Independent Variable
GDP per capita 10and GDP growth rates World Bank 1990–2010
Average years of education World Bank 1990–2010
Composition of employment World Bank 1990–2010
Population age structure United Nations 1990–2010
Percentage urban United Nations 1990–2010
Social security rules US Social Security Administration 1990–2010
World Bank publication on pension coverage in Latin
Social Security Measures (coverage rate, beneficiary rates) America and the Caribbean (LAC) and Rofman and 1990–2010
Carranza (2005)
Note: GDP per capita is measured in purchasing power parity (PPP), 2010 US$.

2.2 Methods
The analysis is divided in two parts. The first part of the paper presents analyses of
stylized facts about demographic trends, elderly labor force participation, retirement
trends, and public pension coverage across Latin American countries. In the second
part, the paper uses regression models, with country level data, to investigate the
determinants of elderly labor force participation across countries and over time.

124 International Journal of Population Studies 2017, Volume 3, Issue 1