Demographic Changes in Latin America : The Good, the Bad and …

Author/Editor:

Santiago Acosta Ormaechea ; Marco A Espinosa-Vega ; Diego Wachs

Publication Date:

April 13, 2017

Electronic Access:

Free Full text (PDF file size is 1689 KB).Use the free Adobe Acrobat Reader to view this PDF file

Link to data for this title(ZIP file size is 5863 KB).

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

The paper develops a simple, integrated methodology to project public pension cash flows and healthcare spending over the long term. We illustrate its features by applying it to the LAC5 (Argentina, Brazil, Chile, Colombia and Mexico), where public spending pressures are expected to increase significantly over 2015-50 due to demographic trends and rising healthcare costs. We simulate alternative pension reforms, including the transition from a defined benefit to a defined contribution pension system and the fiscal burden of a minimum guaranteed pension under the latter. We also analyze public healthcare outlays in the LAC5, which is likewise expected to increase significantly over 2015-50 due to aging and the so-called excess cost growth factor of healthcare services, showing that curbing the evolution of the latter (e.g., through enhanced competition in the healthcare sector) could aid in containing spending pressures. Despite its simplicity, the methodology yields projections that compare well with other approaches. It therefore provides a good benchmark for assessing alternative reform scenarios, particularly in data-constrained countries.

Series:

Working Paper No. 17/94

Subject:

English

Publication Date:

April 13, 2017

ISBN/ISSN:

9781475594775/1018-5941

Stock No:

WPIEA2017094

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

48

Please address any questions about this title to publications@imf.org