Valdés-Prieto, Salvador2014-09-172014-09-172008-07https://hdl.handle.net/10986/20198The 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.en-USCC BY 3.0 IGOBANK LENDINGBENEFICIARIESBENEFICIARYBUDGET CONSTRAINTBUDGET CONSTRAINTSBUSINESS CYCLECAPITAL ACCUMULATIONCAPITAL STOCKCASH TRANSFERSCHILD LABORCOMMUNITY DEVELOPMENTCONSUMER CREDITCONSUMER DEBTCONSUMER LOANSCORPORATE INCOME TAXESCREDIT LIMITSCREDITORCSDEBTORDEMOCRACYDEMOGRAPHICDEMOGRAPHIC CHANGEDERIVATIVESDISABILITIESDISABILITYDISCOUNT RATEDIVORCEEARLY CHILDHOODEARNED INCOME TAX CREDITEARNINGSECONOMIC DEVELOPMENTEMERGING ECONOMIESEMPLOYEEEMPLOYEREMPLOYERSEMPOWERMENTEXPENDITUREFINANCIAL MARKETFINANCIAL SAVINGFINANCIAL SUSTAINABILITYFISCAL POLICYFIXED RATEFOOD PRICESFRAUDFUTURE GROWTHGLOBALIZATIONGROWTH RATEHOMEHOUSEHOLD INCOMEHOUSEHOLDSHUMAN CAPITALHUMAN DEVELOPMENTILLIQUIDITYIMPLICIT TAXIMPLICIT TAXESINCOMEINCOME FLOWSINCOME LEVELSINCOME TAXINCOME TAX CREDITINCOME TAXESINCOMESINEQUALITYINFORMATION SYSTEMSINSTITUTION BUILDINGINSTRUMENTINSURANCEINSURANCE POLICIESINTEREST PAYMENTSINTEREST RATEINTERNAL RATE OF RETURNINVENTORYJOB CREATIONJOB SECURITYJUDGESLABOR LAWSLABOR MARKETLABOR MARKETSLEGISLATIONLENDERLIENLIFE EXPECTANCYLIQUIDATIONMARGINAL TAX RATESMARKET TRENDSMATURITYNATIONAL DEBTNATIONAL SAVINGOLD AGE CRISISOLD-AGE PENSIONOLD-AGE PENSIONSOPEN ECONOMYPENSIONPENSION CONTRIBUTIONSPENSION FUNDPENSION REFORMPENSION RIGHTSPENSION SYSTEMPENSION SYSTEMSPENSIONSPERSONAL INCOMEPERSONAL INCOME TAXPHYSICAL CAPITALPOLITICAL ECONOMYPOLITICAL STABILITYPROPERTY RIGHTSPUBLIC FINANCEPUBLIC PENSIONSRATE OF RETURNREAL INTERESTREAL INTEREST RATEREPLACEMENT RATEREPLACEMENT RATESRETURNSRISK AVERSIONSAVINGSSELF-EMPLOYMENTSELF-FINANCESOCIAL FUNDSSOCIAL INSURANCESOCIAL NETWORKSSOCIAL PROTECTIONSOCIAL SAFETY NETSOCIAL SAFETY NETSSOCIAL SECURITYSOCIAL SECURITY SYSTEMSOCIAL VALUESOCIAL WELFARESOURCE OF INCOMESTATE SUPPORTSTATE SUPPORTSTAXTAX CREDITTAX INCENTIVESTAX RATETAX RATESTAX REGIMESTAX SYSTEMTAX TREATMENTTAXATIONTHIRD WORLDTRANCHETRANCHESTRANSITION COUNTRIESTRANSPARENCYTURNOVERUNEMPLOYMENTUNEMPLOYMENT INSURANCEUNEMPLOYMENT RATEVALUATIONWILLWITHDRAWALWOMAN10.1596/20198