Is there a positive incentive effect from privatizing social security : evidence from Latin America

There is increasing concern among policymakers that social security reforms that involve a transition to individual retirement savings accounts may exclude certain groups of workers from coverage against the risk of poverty in old age. While most public pay-as-you-go systems pool the risk of interrupted careers and periods of low earnings over the covered population, the reformed systems shift the burden of these risks to the individual. Adequate coverage under a system of individual retirement accounts depends critically on accumulating sufficient savings through regular contributions. In developing countries where opportunities for unregulated employment abound and workers can easily escape mandated social insurance, theory suggests that reforms will increase the number of contributors to social security by reducing distortions and improving incentives in the labor market. Motivated primarily by fiscal pressures stemming from the deficits of overly generous, poorly administered public pension systems, many governments are going ahead with reforms as if this theory is correct. Does a shift to individual retirement accounts improve the incentives to contribute to social security? Almost a decade after reforms to national social security systems in Latin America (two decades, in the case of Chile), existing evidence is mixed. Several studies have found that the share of the Chilean workforce covered by the national pension system has increased since individual retirement accounts were installed in 1981; others have shown that there has been no change in this share. But these studies rely on simulations or on casual observation of data on the sectoral allocation of the labor force and relate only to Chile. Sufficient time has now passed since reforms in several Latin American countries to allow more rigorous testing of the theory. The author estimates the impact of social security reform-specifically, the transition from a purely public pay-as-you-go system to one with private individual retirement accounts-on the share of the workforce that contributes to formal retirement security systems. To test the predictions of a simple model of a segmented labor market, he exploits variation in data from a panel of 18 Latin American countries, observed from 1980 to 1999. Results show that introducing individual retirement accounts has a positive incentive effect that, other things equal, increases the share of the economically active population contributing to the reformed system. But this effect occurs only gradually as employers and workers become familiar with the new set of social security institutions put in place by reform.Health Economics&Finance,Labor Policies,Environmental Economics&Policies,Pensions&Retirement Systems,Public Health Promotion,Environmental Economics&Policies,Pensions&Retirement Systems,Health Economics&Finance,Banks&Banking Reform,Health Monitoring&Evaluation

Are health care payments in Albania catastrophic? Evidence form ALSMS 2002, 2005 and 2008

The absent or poorly functioning risk pooling mechanisms and high amounts of out-of-pocket payments for health care expose households to financial risks associated with major illnesses or accidents. The aim of this paper is to analyse the extent to which out-of-pocket health spending impoverish the households in Albania. The study augments the existing evidence by analysing the dynamics of such payments over different years and the weight that informal payments have in the total out-of-pocket health spending. The data used in this study come from Albania Living Standard Measurement Survey (ALSMS) for 2002, 2005 and 2008. We measure headcount catastrophic payments using different thresholds and the decomposition of indicators by expenditure quintiles to understand better their effects. We find that out-of-pocket and informal payments have increased in real value throughout the years. Even though their catastrophic effect has gone down (due also to declining trends in absolute poverty), the effect for the poorest expenditure quintiles remains high. Out-of-pocket payments deepen the poverty headcount and also enlarge the poverty gap and again the effect is larger for the poorest quintiles. Future policy interventions should provide better protection mechanisms for the poor by providing exemption criteria or subsidised transport and should seek to address the widespread informal payments in the country.informal payments, out-of-pocket payments, health care expenditure, impoverishment, Albania LSMS, Albania, living standard, poverty

Seeking solutions to Vulnerability in Old Age: Preferences, constraints, and alternatives for coverage under Peru's pension system

Exploiting new data from a survey and behavioral experiment conducted in Peru we analyze individuals?preferences for securing income in old age. We identify a group that is unrationed by the mandate to save in Peruç—´ pension system, and draw insights from their affiliation and contribution behavior. Among the unrationed, those who are more tolerant of risk, have more children, and have a greater share of housing in their accumulated assets are less likely to affiliate and/or contribute to the formal pensions system. Further, the less risk tolerant choose private individual retirement accounts over a publicly administered pension system.Pensions, vulnerability, risk preferences, Latin America

Pooling, savings, and prevention - mitigating the risk of old age poverty in Chile

Using data collected in a survey on risk, and social insurance in Chile, the author funds that workers who entered the labor market after the pension reform of 1981, have a greater"contribution density"than those who contributed to the previous social security system. Further, the expectation of care from children, and the amount spent on their education, significantly lowers the likelihood of contribution to the pension system. Workers who have met the contributory requirements to qualify for the minimum pension guaranteed by the government, are significantly less likely to continue making contributions. The likelihood of contributions beyond the eligibility threshold being lowered further, the greater the market rental value of respondents'homes. Furthermore, individuals with a greater tolerance for risk contribute, suggesting that there are retirement security investments in Chile, that are perceived as relatively less risky than saving in the reformed pension system. The results indicate that housing could beone such investment.Banks&Banking Reform,Payment Systems&Infrastructure,Labor Policies,Insurance&Risk Mitigation,Environmental Economics&Policies,Insurance&Risk Mitigation,Banks&Banking Reform,Environmental Economics&Policies,Health Economics&Finance,Safety Nets and Transfers

The Memory System Engaged During Acquisition Determines the Effectiveness of Different Extinction Protocols

Previous research indicates that extinction of rodent maze behavior may occur without explicit performance of the previously required response. In latent extinction, confining an animal to a previously rewarded goal location without reinforcement is typically sufficient to produce extinction of maze learning. However, previous studies have not determined whether latent extinction may be successfully employed to extinguish all types of memory acquired in the maze, or whether only specific types of memory may be vulnerable to latent extinction. The present study examined whether latent extinction may be effective across two plus-maze tasks that depend on anatomically distinct neural systems. Adult male Long-Evans rats were trained in a hippocampus-dependent place learning task (experiment 1), in which animals were trained to approach a consistent spatial location for food reward. A separate group of rats were trained in a dorsolateral striatum-dependent response learning task (experiment 2), in which animals were trained to make a consistent egocentric body-turn response for food reward. Following training, animals received response extinction or latent extinction. For response extinction, animals were given the opportunity to execute the original running approach response toward the empty food cup. For latent extinction, animals were confined to the original goal locations with the empty food cup, thus preventing them from making the original running approach response. Results indicate that, relative to no extinction, latent extinction was effective at extinguishing memory in the place learning task, but remained ineffective in the response learning task. In contrast, typical response extinction remained very effective at extinguishing memory in both place and response learning tasks. The present findings confirm that extinction of maze learning may occur with or without overt performance of the previously acquired response, but that the effectiveness of latent extinction may depend on the type of memory being extinguished. The findings suggest that behavioral treatments modeled after response extinction protocols may be especially useful in alleviating human psychopathologies involving striatum-dependent memory processes (i.e. drug addiction and relapse)

Emotional arousal and multiple memory systems in the mammalian brain

Emotional arousal induced by stress and/or anxiety can exert complex effects on learning and memory processes in mammals. Recent studies have begun to link study of the influence of emotional arousal on memory with earlier research indicating that memory is organized in multiple systems in the brain that differ in terms of the “type” of memory they mediate. Specifically, these studies have examined whether emotional arousal may have a differential effect on the “cognitive” and stimulus-response “habit” memory processes sub-served by the hippocampus and dorsal striatum, respectively. Evidence indicates that stress or the peripheral injection of anxiogenic drugs can bias animals and humans toward the use of striatal-dependent habit memory in dual-solution tasks in which both hippocampal and striatal-based strategies can provide an adequate solution. A bias toward the use of habit memory can also be produced by intra-basolateral amygdala (BLA) administration of anxiogenic drugs, consistent with the well documented role of efferent projections of this brain region in mediating the modulatory influence of emotional arousal on memory. In some learning situations, the bias toward the use of habit memory produced by emotional arousal appears to result from an impairing effect on hippocampus-dependent cognitive memory. Further research examining the neural mechanisms linking emotion and the relative use of multiple memory systems should prove useful in view of the potential role for maladaptive habitual behaviors in various human psychopathologies

Living on the edge of chaos: minimally nonlinear models of genetic regulatory dynamics

Linearized catalytic reaction equations modeling e.g. the dynamics of genetic regulatory networks under the constraint that expression levels, i.e. molecular concentrations of nucleic material are positive, exhibit nontrivial dynamical properties, which depend on the average connectivity of the reaction network. In these systems the inflation of the edge of chaos and multi-stability have been demonstrated to exist. The positivity constraint introduces a nonlinearity which makes chaotic dynamics possible. Despite the simplicity of such minimally nonlinear systems, their basic properties allow to understand fundamental dynamical properties of complex biological reaction networks. We analyze the Lyapunov spectrum, determine the probability to find stationary oscillating solutions, demonstrate the effect of the nonlinearity on the effective in- and out-degree of the active interaction network and study how the frequency distributions of oscillatory modes of such system depend on the average connectivity.Comment: 11 pages, 5 figure

Blood rheology, cardiovascular risk factors, and cardiovascular disease: The West of Scotland Coronary Prevention Study

The West of Scotland Coronary Prevention Study (WOSCOPS) showed that pravastatin reduced the risk of coronary heart disease (CHD) events in 6,595 middle-aged hypercholesterolaemic men aged 45-64 years without prior myocardial infarction followed for an average of 4.9 years. We hypothesised prospectively (a) that baseline levels of haemorheological variables were related to baseline and incident CHD and to mortality; and (b) that reduction in lipoproteins by pravastatin would lower plasma and blood viscosity, a potential contributory mechanism to CHD events. We therefore studied plasma and blood viscosity, fibrinogen, haematocrit, and blood cell counts at baseline and 1 year. At baseline, plasma and blood viscosity were related to risk factors, CHD measures, and claudication. On univariate analysis, baseline levels of all rheological variables (except platelet count) were related to incident CHD; CHD mortality; and total mortality. On multivariate analysis including baseline CHD and risk factors, plasma and blood viscosity, haematocrit and white cell count each remained significantly associated with incident CHD; while fibrinogen remained an independent predictor of mortality (all p<0.03). After one year, lipoprotein reduction by pravastatin was associated with significant reductions (about one quarter of a standard deviation) in plasma viscosity (mean difference 0.02 mPa.s, p<0.001) and in blood viscosity (mean difference 0.06 mPa.s, p<0.001), but was not associated with significant changes in other rheological variables. We therefore suggest that pravastatin therapy, which reduces elevated lipoproteins in hypercholesterolaemic men, may lower risks of CHD and mortality partly by lowering plasma and blood viscosity. Further studies are required to test this hypothesis