Achieving Effective Social Protection for All in Latin America and the Caribbean
140 Pages
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Achieving Effective Social Protection for All in Latin America and the Caribbean


YouScribe would like you to have this content free of charge
140 Pages


This study highlights the interaction between social protection programs and labor markets in the Latin America region. It presents new evidence on the limited coverage of existing programs and emphasizes the challenges caused by high informality for achieving universal social protection for old age income, for health, for unemployment risks and for anti poverty safety nets. It identifies interaction effects between SP programs and the behavioral responses of workers, firms and social protection providers, which can further undermine efforts to expand coverage, summarizing evidence from recent work across the region. It argues for a re-design of financing to eliminate cross subsidies between members of contributory programs and subsidies that effectively tax income from formal employment. Instead, it advocates well-targeted, tax-funded tapered subsidies to provide incentives to the savings efforts of low income workers, coupled with an effective safety net for the extreme poor who have no capacity to contribute to financing their own social protection arrangements. It also argues for the consolidation of programs and harmonization of benefits packages across different insurers. The book develops an overall conceptual framework and presents in-depth analysis of the main SP sectors of pensions, health, unemployment insurance and safety net transfers.



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Published 22 June 2010
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EAN13 9780821383995
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Human De v elopmen t
Achieving Effective
Social Protection for All
in Latin America and
the Caribbean
From Right to Reality
Helena Ribe, David A. Robalino,
Ian WalkerAchieving Effective Social Protection
for All in Latin America and the CaribbeanAchieving Effective Social
Protection for All in Latin
America and the Caribbean
From Right to Reality
Helena Ribe
David A. Robalino
Ian Walker© 2010 The International Bank for Reconstruction and Development / The World Bank
1818 H Street NW
Washington DC 20433
Telephone: 202-473-1000
All rights reserved
1 2 3 4 13 12 11 10
This volume is a product of the staff of the International Bank for Reconstruction and
Development / The World Bank. The findings, interpretations, and conclusions expressed in this
volume do not necessarily reflect the views of the Executive Directors of The World Bank or the
governments they represent.
The World Bank does not guarantee the accuracy of the data included in this work. The
boundaries, colors, denominations, and other information shown on any map in this work do not
imply any judgement on the part of The World Bank concerning the legal status of any territory
or the endorsement or acceptance of such boundaries.
Rights and Permissions
The material in this publication is copyrighted. Copying and/or transmitting portions or all of this
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For permission to photocopy or reprint any part of this work, please send a request with com-
plete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA
01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet:
All other queries on rights and licenses, including subsidiary rights, should be addressed to the
Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax:
202-522-2422; e-mail:
ISBN: 978-0-8213-8398-8
eISBN: 978-0-8213-8399-5
DOI: 10.1596/978-0-8213-8398-8
Cover art: Carla Robalino
Cover design: Quantum Think, Inc.
Library of Congress Cataloging-in-Publication Data
Ribe, Helena, 1949-
Achieving effective social protection for all in Latin America and the Caribbean : from right to
reality / Helena Ribe, David A. Robalino, and Ian Walker.
p. cm. — (Directions in development)
Includes bibliographical references and index.
ISBN 978-0-8213-8398-8 (alk. paper) — ISBN 978-0-8213-8399-5
1. Social security—Latin America. 2. Economic assistance, Domestic—Latin America. 3. Public
welfare—Latin America. I. Robalino, David A. II. Walker, Ian, 1957- III. World Bank. IV. Title.
HD7130.5.R53 2010
Foreword ix
Acknowledgments xi
Abbreviations xiii
Overview 1
Introduction 7
References 10
Chapter 1 The State of Social Protection in Latin America
and the Caribbean: Recent Progress and Pending
Challenges 13
Recent Developments and Challenges in
SP Systems 14
Challenge I: Contributory Social Insurance
Coverage Remains Low and Limited to the
Formal Sector 15
Challenge II: LAC’s Social Insurance Systems
are Fragmented and Uncoordinated 21
vvi Contents
Challenge III: Redistribution within the Social
Insurance Systems is Opaque, Often Regressive,
and Can Distort Incentives to Work and Save 27
Challenge IV: Enhancing the Effectiveness and
Human Capital Impact of Income Support
Programs 36
Challenge V: Increasing Access to Quality Jobs 44
Notes 47
References 49
Chapter 2 A Policy Framework for Social Protection in
Latin America and the Caribbean 53
Conceptual Framework: Understanding the
SP System 53
Policy Implications of the Conceptual
Framework 59
Opening Social Insurance Access to All 61
Reviewing the Mandates (Benefits Packages)
of Social Insurance Programs 62
Making Social Insurance Subsidy Systems
Transparent and Progressive 67
Making Social Protection Programs
More Coherent 72
Deepening Safety Nets and Facilitating Access
to Better Jobs 76
Notes 78
References 79
Chapter 3 Implications for Social Protection Programs 81
Pensions 81
Health 84
Unemployment Benefits 87
Active Labor Market Programs 89
Safety Net Programs 93
Strengthening Crisis Response Capacity 96
Notes 96
References 97
Chapter 4 The Trajectory of Reform 99
Reformers 100
Partial Reformers 102Contents vii
Traditional Systems 104
The Way Forward 105
Note 107
Reference 107
Glossary 109
Index 113
1.1 The Effect of Setting Workfare Wages Too High:
The Case of PLANE, Bolivia 43
2.1 The Limitations of Funding SI Entirely from General
Taxation in LAC 63
1.1 Contributory Pension Coverage in Latin America
and the Caribbean, 1990s to 2000s 16
1.2age Rates in Latin America
and the Caribbean in the 2000s, by Quintile of per
Capita Income 17
1.3 Contributory Health Insurance Coverage in LAC,
Mid-2000s 18
1.4ance Coverage in LAC,
Mid-2000s, by Decile of per Capita Income 19
1.5 Unemployment Insurance Savings Accounts per
Employed Worker 19
1.6 The Share of the Formal and Informal Sectors in LAC
Labor Markets 21
1.7 Contributory and Noncontributory Pension Coverage
among the Elderly by Income Quintiles and Source in
the 2000s 22
1.8 Contributory, Noncontributory, and Combined Health
Insurance Coverage in the Mid-2000s by Income
Quintiles and Source 23
1.9 Mandates of Pension Systems (average worker) 25
1.10 Mandates of Unemployment Benefit Systems
(average worker) 26
1.11 Implicit Taxes and Subsidies in the Brazilian
Pension System 29viii Contents
1.12 Changes in Rates of Return on Contributions for
Pension Resulting from a One Percentage Point Increase
in the Growth Rate of Wages during a Working Life 30
1.13 Impact on Rate of Return on Contributions of Increasing
the Retirement Age from 65 to 70 32
1.14 The Impact on Choice of Informality and Increase in the
Effective Marginal Tax Rate on Formal Wages 35
1.15 Coverage of Income Transfer Programs in LAC 36
1.16 Cost of CCT Programs in LAC 37
1.17 GDP per Capita, Labor Productivity, and Employment
Growth 44
1.18 Tax Wedges in LAC Countries and the World 46
2.1 A Conceptual Framework for Social Protection 55
2.2 Examples of Different Mandates for Pensions 65
2.3 The Obligatory Mandate and Optional Additional Plans
of a Hypothetical Social Health Insurance System 66
2.4 Share of Social Security Contribution Rate Allocated to
Nonessential Benefits 75
4.1 Policy Innovations and Income per Capita 100
1.1 Contribution Densities in Argentina, Chile, and Uruguay 22
1.2 Institutional Integration of LAC’s SI Systems 24
1.3 Distribution of Subsidies to Social Insurance and Social
Assistance in LAC 31
2.1 Employment Barriers and Potential Corrective Measures 77
4.1 Initial Conditions That Affect Reforms 101