The combined forces of increased longevity, lower fertility, and weakening risk-sharing networks make financing the future consumption and wellbeing of the elderly population a major concern globally. In low- and middle-income countries, large informal economies pose formidable challenges for the design of pension systems. Higher informality rates result in less tax and pension revenue and greater reliance on costly safety nets for the elderly. Worse still, mandatory pension contributions and cash transfers can incentivize workers to avoid formal employment, making it hard to reconcile old-age poverty reduction and balanced budgets.
In this Policy Research Talk, World Bank Research Economist Clément Joubert will discuss how his and others' research informs pension policy design in high-informality settings. The presentation will focus on three questions: (i) What disincentives for formal work are embedded in pension programs? (ii) Where do gender disparities in pension benefits originate and how can they be reduced? (iii) Can workers in the informal economy afford to participate in voluntary pension schemes? The talk will conclude with a discussion of some of the remaining knowledge gaps around pension design in low- and middle-income countries.
The monthly Policy Research Talks showcase the latest findings of the World Bank’s research department, challenge and contribute to the institution’s intellectual climate, and re-examine conventional wisdom in current development theories and practice. These talks facilitate a dialogue between researchers and operational staff and inform World Bank operations both globally and within partner countries. Read More »