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

when retirement hazard rates were calculated using a synthetic cohort approach. In the
period of analysis, over 35% of older men left the workforce between ages 60 and 65.
One important point in Table 3 is a wide variation in hazard rates. For example, in
2000, on average, 16% of those in the labor force in the age groups 55–60 left the
labor force when they reached ages 60–65, but in the country with the highest hazard
rate out of the labor force, Suriname, about 77% left the labor force in that period.
Contrary to what was observed in other countries (Hurd and Rohwedder, 2011), the
results did not indicate a substantial decline in the retirement hazard rates for men in
Latin America.
The estimates of retirement hazard rates indicate that in Latin America, most older
adults leave the labor force between ages 60 and 65. In addition to public pension
programs and other financial and non-financial incentives might play a significant
role. These hazard rates can be compared with the rates estimated for OECD countries
(Gruber and Wise, 1999). For example, they estimate hazard retirement rates around
year 1995 of about 60% at age 60 for France, almost 80% at age 65 in Belgium, 25%
at age 65 in the USA, and 55% at age 55 in Germany. One of the striking results in that
study is the very high hazard rates of labor force exit at ages in many countries. These
high hazard rates are typically observed at ages associated with strong incentives to
retire due to features of the retirement system (Gruber and Wise, 1999)
The observed variation in the labor force of older men and in the retirement
hazard rates out of the labor force could be explained by a myriad of factors (Coile,
2015), such as income and educational level, percentage of urban population and
characteristics of the public pension programs. The statistical analysis performed in the
next section tries to shed some light on the relations observed in Latin America.

3.4 Statistical Modeling

3.4.1 Summary Statistics
Table 4 presents the summary statistics for dependent and independent variables for
the 23 Latin American and Caribbean countries in our dataset. The table reports the
mean, the standard deviation, the maximum, and the minimum of study variables for
1990 and 2010 only. Some points should be highlighted from Table 4. In the period
1990–2010, it was observed that the population age structure was young: on average
the percentage of population aged 65 and over went from 5% to almost 7%. However,
the percentage of population aged 65 and over ranged from as low as 3% to almost
14% in 1990 and from 4% to 14% in 2010, which was much lower than most of the
percentages of the older adult in more developed economies in the same period. The
working-age population in Latin American countries, on average, accounted for 60%
of the total population in the study period, but reaching over 70% in one country in
2010. There was still a large concentration of the labor force in the informal sector:
on average 40% of workers were in the informal sector and most of them are not
covered by the public pension system. This could have important impacts on the labor
force participation of older adults in Latin America. Lastly, although there have been
improvements in educational attainment in Latin American countries in recent years
(Levy and Schady, 2013), the region is characterized by low educational levels. On
average, workers in Latin America had less than 7.8 years of formal education in 2010,
ranging from 4.1 to 9.7 years in 2010, compared to very low levels of 2.7 years of
schooling in 1990.
The means were calculated as an average across all countries and were not weighted
by population size. As shown earlier, for one point in time, labor force participation
declined with age, on average from 92% for those aged 50–55 to less than 45%
for those aged 65+. There is a large variation across Latin American countries,
for example, LFPR for males aged 55–60 ranged from 61% (in Brazil, Chile, and
Uruguay) to 94% (very high) in countries such as Bolivia and Venezuela. It is
important to stress, however, that from 1990 to 2010, on average, changes in labor

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