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Queiroz BL

Figure 1. Labor force participation rates (LFPR, %) by age, sex, and country, 2005

3.1.2 Overview of Pension Programs

It is observed from Figure 1 that in countries with higher income the labor force
participation at older ages is lower. This evidence goes in line with the discussion that
rising income levels might create incentives to early withdraw from the labor force as it
was observed in more developed countries (Melguizo, Bosch, and Pages-Serra, 2017).
Table 2 shows summary measures of public pension coverage in major Latin American
countries in terms of the ratio of contributors by wage earners and the ratio of
beneficiaries by population. Estimates are the simple average from available data from
1990 to 2005. The table also shows the standard deviation (SD), the maximum, and the
minimum of each measure for each country over the study period. The first measure
shows the ratio of workers contributing to the pension system to the number of wage
earners. Results indicate that more developed economies in Latin America (Argentina,
Brazil, Chile, Colombia, Costa Rica, Mexico, and Uruguay) had a higher percentage of
workers contributing to the pension system in most recent years. In general, it is also
observed that the percentage of contributors to wage earners was increasing over time.
The results also show that a large number of countries had a very low coverage with
less than 50% of workers making contributions to their pension systems. The second
measure is the ratio between pension beneficiaries to individuals aged 65 and above.
The results show that only Brazil, Chile, and Uruguay had over 80% of older adults
receiving pension benefits, and for most of Latin American countries, less than 40% of
older adults were covered by the system of their home country.

3.2 Unused Labor Capacity, Pensions and Economic Development
Figure 2 shows the unused capacity for 23 Latin American countries around 2005
for age group 50–65. The unused capacity in this age group ranged from 15% in
Guatemala to 40% in Uruguay. This means that in Uruguay, individuals aged 50–65
were working only 60% of their potential working life. A wide variation across
countries in the region was also observed with the mean of about 30% and the standard
deviation of 10.

International Journal of Population Studies 2017, Volume 3, Issue 1 127