Publication: Labor History and Contribution Density in the Pension System of the Dominican Republic
Loading...
Date
2025-04-17
ISSN
Published
2025-04-17
Author(s)
Zunino, Gonzalo
Editor(s)
Abstract
This paper estimates the proportion of workers who would meet the required contribution periods to access a contributory retirement pension in the Dominican Republic. Using microdata from labor histories, the paper proposes a survival model to estimate the hazard rates of entering and exiting the contributory state in the pension system. Furthermore, a Monte Carlo simulation is performed to project contributory histories. The results suggest that the transition rates are relatively high, averaging a probability of exiting the contributory (non-contributory) state of 7 percent (6 percent). Moreover, the hazard rate of transitioning to a different state is negatively associated with the worker’s duration in the current state. These effects are conditioned to the age and income level of the worker. Finally, a simulation of new labor histories estimates that slightly more than 20 percent of the workers would meet the requirement of 30 years of contributions by age 60, and this percentage would exceed 40 percent if the required years of contributions were reduced to 20.
Link to Data Set
Citation
“Apella, Ignacio; Zunino, Gonzalo. 2025. Labor History and Contribution Density in the Pension System of the Dominican Republic. Policy Research Working Paper; 11103. © World Bank. http://hdl.handle.net/10986/43105 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication From Patriarchy to Policy(Washington, DC: World Bank, 2025-05-29)Legal institutions play an important role in shaping gender equality in economic domains, from inheritance to labor markets. But where do gender equal laws come from? Using cross-country data on social norms and legal equality, this paper investigates the socio-cultural roots of gender inequity in the legal system and its implications for female labor force participation. To identify the impact of social norms, the analysis uses an empirical strategy that exploits pre-modern differences in ancestral patriarchal culture as an instrument for present-day gender norms. The findings show that ancestral patriarchal culture is a strong predictor of contemporary norms, and conservative social norms are associated with more gender inequality in the de jure legal framework, the de facto implementation of laws, and the labor market. The paper presents evidence for a political selection mechanism linking norms to laws: countries with more conservative norms elect political leaders who are more hostile to gender equality, who then pass less progressive legislation. The results highlight the cultural roots and political drivers of legalized gender inequality.Publication Geopolitics and the World Trading System(Washington, DC: World Bank, 2024-12-23)Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.Publication Rethinking Fiscal Policies(Washington, DC: World Bank, 2025-05-27)This paper examines the redistributive impact of fiscal policy—specifically taxes and transfers—on poverty and inequality in eight countries in the Middle East and North Africa: the Arab Republic of Egypt, Djibouti, the Islamic Republic of Iran, Iraq, Jordan, Morocco, Tunisia, and the West Bank and Gaza. Utilizing the Commitment to Equity framework, the analysis evaluates how fiscal interventions alter income distribution across these diverse national contexts. The results indicate that direct cash transfers and social assistance programs are generally effective in reducing poverty and shielding vulnerable populations, while in-kind benefits—particularly in education and healthcare—significantly contribute to mitigating income inequality. In contrast, generalized subsidies, especially in the energy sector, are fiscally burdensome and largely regressive, offering limited equity gains. Indirect taxes, although important for revenue generation, often exacerbate income disparities. The study underscores the need for comprehensive fiscal reforms, including the expansion of well-targeted transfers, adoption of progressive taxation, and reallocation of inefficient subsidies toward investments in human capital. Successful initiatives, such as Egypt’s Takaful and Karama and Jordan’s Takaful and bread subsidy compensation programs, illustrate scalable models of effective redistribution. Moreover, the Islamic Republic of Iran’s progressive tax policies highlight viable pathways to equitable revenue mobilization. Strengthening investment in education and health is essential for promoting long-term equity, enhancing upward mobility, and supporting inclusive and sustainable development across the region.Publication Yield Gains from Balancing Fertilizer Use(Washington, DC: World Bank, 2025-05-29)As with most agricultural inputs, the optimal use of fertilizer leverages the production complementarities between different types of nutrients. Wide variation in the intensity of nutrient application rates suggests there are potentially large productivity gains to be had from rebalancing fertilizer use across nutrient types even under a fixed expenditure budget. Using detailed information on a large sample of rice fields across three states in eastern India, this paper investigates whether a more balanced use of fertilizer—measured as the ratio of potash to nitrogen applied to a field—can lead to higher yields and revenues. To address the endogeneity of fertilizer application decisions, the analysis exploits the fact that nitrogen-based fertilizers demanded by Indian farmers are mostly produced domestically in a limited number of manufacturing plants, while all potash-based fertilizers must be imported by ship from abroad. Instrumenting for the ratio of potassium-to-nitrogen fertilizer applied on a field with the relative travel distances between farmers’ villages and both the nearest urea production plant and the nearest international port, the paper estimates the impact of more balanced fertilizer use on yields and revenues. The estimates show that at median levels of fertilizer use, and keeping the level of expenditure on fertilizers constant, rebalancing fertilizer application choices such that the potassium-to-nitrogen ratio of fertilizer is doubled would lead to a 4.8 percent increase in yield.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication A Theory of Contribution Density and Implications for Pension Design(World Bank, Washington, DC, 2008-07)The adequacy of contributory pensions for the middle classes depends on density of contribution. Density can be far below 100% because the State is unable or unwilling to impose the mandate to contribute on all jobs, especially on poor workers such as many in self-employment and small firms. The paper presents a model where individuals choose whether to bundle saving for old age in a covered job or to save independently while choosing an uncovered job. The determinants of the effective rate of return offered by the contributory pension plan include the earnings differential. This return is then compared with the returns offered by pure saving in the financial market, to determine the equilibrium density of contribution. The paper also applies the model to assess two standard designs for noncontributory subsidies for the old poor. It finds that these standard designs crowd out contributory pensions for the middle classes by reducing density. The paper also considers two second-generation designs for noncontributory subsidies and other approaches to raise density. This model also allows optimization of the combined multipillar structure, where participants get noncontributory pensions and also contributory pensions based on both mandates and fiscal incentives.Publication Republic of Niger : Towards an Integrated and Sustainable Pension System(Washington, DC, 2009-06-30)This report was prepared at the request of the Government of Niger to: (i) provide a comprehensive assessment of the Nigerien pension system, (ii) analyze current reform initiatives and recommend possible refinements and alternatives, and (iii) examine implementation challenges. To this end, the report develops a set of general guidelines to assess reform options in terms the adequacy of benefits, security, financial sustainability, redistribution, incentives, and administrative efficiency. The core of the report is organized in three chapters. After providing a summary of the background (chapter one), chapter two develops the policy framework and updates the assessment of the mandatory pension systems. The assessment looks at the financial situation of the schemes but also discusses other problems that had been previously overlooked in terms of the adequacy of benefits; the type of redistribution; as well as issues related to incentives. Chapter three reviews Government ongoing reform initiatives, summarizes the international experiences that are relevant to Niger, and, presents recommendations to strengthen current policies by outlining the components of a multi-year reform program, and developing a road map towards implementation.Publication Republic of Djibouti - Pension System Reform : Strategic Note(Washington, DC, 2001-12)The Government of Djibouti has committed to reform its pension system in order to restore financial sustainability and improve management. To this end, it requested the World Bank to elaborate a pension reform strategy that identifies the major financial and institutional constraints facing the pension funds and explores restructuring options. This policy note summarizes the major diagnosis and policy recommendations of the study, reflecting comments from government officials and the Bank's technical experts during the internal review meeting held on March 15, 2001. In the case of Djibouti, a two-stage reform program is proposed. A first stage would concentrate on consolidating a modest pay-as-you-go system, and involve executing three major activities: 1) implementing institutional reforms to improve governance and management, and to generate efficiency gains that enhance service delivery and reduce administrative costs; 2) addressing short-term financial needs by normalizing government contributions, defining a plan to refinance government arrears, and introducing a ceiling for the replacement rate in the regime for parliamentarians; and 3) improving the medium-term financial situation of the pension funds. A second stage of the reform program would focus on merging the Social Protection Organism (OPS) and the National Pensions Fund (CNR); and introducing/reinforcing incentives to promote contractual savings.Publication Understanding Labor Market Demand in Real Time in Argentina and Uruguay(Washington, DC: World Bank, 2025-03-18)This paper explores how job vacancy data can enhance labor market information systems (LMISs) in Argentina and Uruguay where, as in many countries, data on in-demand skills is lacking. By analyzing job postings collected over four years in Argentina and Uruguay, this study assesses the potential of vacancy data to fill labor market data gaps. The findings reveal that vacancy data capture labor market dynamics across time and geography, showing a strong correlation with traditional labor market indicators such as employment and unemployment. However, the data are biased towards higher-skilled occupations. Despite these limitations, the large volume of postings allows for robust inferences and provides valuable insights into skills demand. The study presents three key applications of the data: 1) using postings as a leading indicator of labor market health; 2) identifying in-demand skills; and 3) mapping similarities between occupations to improve the information available to job counselors to provide advice about job transitions. Finally, the paper contributes methodologically by developing both a manually created skills taxonomy and an experimental machine learning approach to classifying skills. The machine learning method, while less comprehensive, highlights in-demand skills and can complement the manual approach by keeping it up to date with minimal input. Overall, the paper demonstrates the potential of job vacancy data to improve LMISs and inform labor market policies in Argentina and Uruguay with immediate practical applications for labor market analysis, skills development, and workforce training.Publication Nonfinancial Defined Contribution Pension Schemes in a Changing Pension World : Volume 1. Progress, Lessons, and Implementation(Washington, DC: World Bank, 2012)Pensions and social insurance programs are an integral part of any social protection system. Their dual objectives are to prevent a sharp decline in income and protect against poverty resulting from old age, disability, or death. The critical role of pensions for protection, prevention, and promotion was reiterated and expanded in the new World Bank 2012-2022 social protection strategy. This new strategy reviews the success and challenges of the past decade or more, during which time the World Bank became a main player in the area of pensions. But more importantly, the strategy takes the three key objectives for pensions under the World Bank's conceptual framework coverage, adequacy, and sustainability and asks how these objectives and the inevitable difficult balance between them can best be achieved. The ongoing focus on closing the coverage gap with social pensions and the new outreach to explore the role of matching contributions to address coverage and/or adequacy is part of this strategy. This comprehensive anthology on nonfinancial defined contribution (NDC) pension schemes is part and parcel of the effort to explore and document the working of this new system or reform option and its ability to balance these three key objectives. This innovative, unfunded individual accounts scheme provides a promising option at a time when the world seems locked into a stalemate between piecemeal reform of ailing traditional defined benefit plans or their replacement with prefunded financial account schemes. The current financial crisis, with its focus on sovereign debt, has enhanced the attraction of NDC as a pension scheme that aims for intra and intergenerational fairness, offers a transparent framework to distribute economic and demographic risks, and, if well designed, promises long-term financial stability. Supplemented with a basic minimum pension guarantee, explicit noncontributory rights, and a funded pillar, the NDC approach provides an efficient framework for addressing poverty and risk diversification concerns.
Users also downloaded
Showing related downloaded files
Publication Europe and Central Asia Economic Update, Spring 2025: Accelerating Growth through Entrepreneurship, Technology Adoption, and Innovation(Washington, DC: World Bank, 2025-04-23)Business dynamism and economic growth in Europe and Central Asia have weakened since the late 2000s, with productivity growth driven largely by resource reallocation between firms and sectors rather than innovation. To move up the value chain, countries need to facilitate technology adoption, stronger domestic competition, and firm-level innovation to build a more dynamic private sector. Governments should move beyond broad support for small- and medium-sized enterprises and focus on enabling the most productive firms to expand and compete globally. Strengthening competition policies, reducing the presence of state-owned enterprises, and ensuring fair market access are crucial. Limited availability of long-term financing and risk capital hinders firm growth and innovation. Economic disruptions are a shock in the short term, but they provide an opportunity for implementing enterprise and structural reforms, all of which are essential for creating better-paying jobs and helping countries in the region to achieve high-income status.Publication South Asia Development Update, April 2025: Taxing Times(Washington, DC: World Bank, 2025-04-23)Growth prospects for South Asia have dimmed. The global economic environment has become more challenging and is a source of heightened downside risks. After a decade of repeated disruptions, South Asia’s buffers to cushion new shocks are slim. Tackling some of its greatest inefficiencies and vulnerabilities could help South Asia navigate this unusually uncertain outlook: unproductive agricultural sectors, dependence on energy imports, pressures from rising global temperatures, and fragile fiscal positions. For most South Asian countries, increased revenue mobilization is a prerequisite for strengthening fiscal positions. Even taking into account the particular challenges of collecting taxes in South Asian economies—such as widespread informal economic activity and large agriculture sectors—South Asian economies face larger tax gaps than the average emerging market and developing economy (EMDE). This suggests the need for improved tax policy and administration. Until fiscal positions have strengthened, the burden of climate adaptation will disproportionately fall on the private sector. If allowed sufficient flexibility, private sector adaptation could offset about one-third of the likely climate damage by 2050. This may, however, require governments to remove obstacles that prevent workers and firms from moving across locations and activities. As growth prospects dim, the challenge grows to create jobs for South Asia’s rapidly expanding working-age population. South Asia’s large diasporas could become a source of strength if their knowledge, networks, and other resources can be better tapped for investment and trade.Publication Morocco Economic Update, Winter 2025(Washington, DC: World Bank, 2025-04-03)Despite the drought causing a modest deceleration of overall GDP growth to 3.2 percent, the Moroccan economy has exhibited some encouraging trends in 2024. Non-agricultural growth has accelerated to an estimated 3.8 percent, driven by a revitalized industrial sector and a rebound in gross capital formation. Inflation has dropped below 1 percent, allowing Bank al-Maghrib to begin easing its monetary policy. While rural labor markets remain depressed, the economy has added close to 162,000 jobs in urban areas. Morocco’s external position remains strong overall, with a moderate current account deficit largely financed by growing foreign direct investment inflows, underpinned by solid investor confidence indicators. Despite significant spending pressures, the debt-to-GDP ratio is slowly declining.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Cities’ Partnership Initiative(Washington, DC: World Bank, 2025-04-24)Sustainable urban development is one of the key areas of development policy in Poland, which is in line with global trends. Sustainable urban development requires an integrated approach that takes into account the complexity and dynamics of phenomena and processes taking place in the urban environment. Meeting the challenges of urban development requires, on the one hand, a steady increase in the capacity of cities to plan and implement development projects, and on the other hand, a favorable regulatory and financial framework and support instruments that are an adequate response to the needs of urban centers. The Cities’ Partnership Initiative (CPI) is a flagship project of the Ministry of Development Funds and Regional Policy of Poland (MDFRP) aimed at supporting sustainable urban development. This final report is the third product of the Reimbursable Advisory Service Agreement on Sustainable Urban Development - Cities’ Partnership Initiative concluded between the MDFRP and the World Bank on January 28, 2022. The report summarizes the project work, including the results of the work of 30 CPI-participating cities, and presents conclusions and recommendations on the three thematic networks and the CPI formula itself.