Author of the MonthPublished: October 13, 2008
The Gender Impact of Social Security Reform
Alejandra Cox Edwards, professor/graduate advisor, Economics
Published in 2008 by the University of Chicago Press, The Gender Impact of Social Security Reform was co-authored with Estelle James and Rebeca Wong. Edwards argues that populations are aging and traditional public and private pension programs around the world are becoming unsustainable. “This crisis is especially dire for women, who live longer than men but have worked less than men in the formal labor force,” she said. “We examine alternative social security systems and their disparate impacts on men and women.” Impact compares the gendered outcomes of social security systems in Chile, Argentina and Mexico, and presents empirical findings from Eastern and Central European transition economies. According to Edwards, critics claim that the closer link between contributions and benefits in the new systems disadvantaged women because of their lower contribution histories. “But this argument overlooks important features of these systems, such as the public benefit and the joint pension requirement,” she said. “The fact that contributions made early in life earn many years of compound interest creates a positive reward to women who work when young, before having children. Later in life, workers who postpone retirement are rewarded with much larger monthly pensions because their accumulations grow and their payouts have to cover fewer years and this particularly benefits full-career women. Also, unlike the old systems, married women can keep their own pension in addition to their widow’s pension. We project monthly benefits, lifetime benefits, imputed taxes and redistributions under the old and new system rules.” Social Security reform is an important part of Edwards’ scholarship. “The common thread in my research work has been the role of labor market rules and regulations on job creation and the spread of economic opportunities,” she explained. “I see traditional pension systems as a combination of a high tax on work with a promise of benefits in old age of dubious value to active workers. In developing countries, characterized by weak revenue collection mechanisms, these high taxes contribute to the formal-informal dichotomy that permeates the socio-economic reality. Pension reforms can help reverse this tendency.” Edwards worked for the World Bank from 1993-96. She acquired her bachelor’s at Chile’s Universidad Catolica and her Ph.D. from the University of Chicago in 1984.