Explores how remittances, pensions and health care provided by Padomi, an office with the social security system, may affect the income security and well-being of old people in Peru. The demographic transition is moderate but accelerating due to a sharp drop in fertility rates, particularly in urban areas, and a rate of actual out-migration that may be larger than officially estimated by the INEI. The latter may imply that the demographic growth rate is half (0.7 percent) its reported rate (1.4 percent). Affiliation to the privately administered pension system has decreased and the national pension system is in actuarial imbalance which deters affiliation (dependency rate is 1 to 1). Thus, evasion to mandatory retirement savings will cause that by 2025, 77 percent of persons older than 65 will not have a pension. The demographic dividend that ends around 2025-30 presents an opportunity f...

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This study utilizes both factorial and cluster analysis techniques to lay out and categorize Peru's departments in decreasing order of development level. The findings show that the chief discrepancies arise in health-related variables. The demographic profile and industrialization indicators also figure prominently. The study confirms the hypothesis of the dual nature of Peruvian society and highlights the sharp differences between department groups according to level of industrialization and rural poverty. The more modern and industrialized Lima and Callao zone is contrasted with traditionally rural Andean region departments. On the premise that inter-regional equality should be one of the Peru's primary goals, it is a matter of urgency that economic policy incorporate fiscal and compensatory measures aimed at improving health standards and stimulating socio-economic development in file...

We simulate rates of return, administration fees and market shares for the five private pension fund managers that constitute the Peruvian AFP industry. After five years of operation and payment of costs related to the introduction of individual pension accounts and the financial strengthening of private managers, the oligopoly reaches high profitability rates. Transactional costs remain high due to lack of competition. Since its inception, affiliates have earned negative returns on their old-age savings thus motivating non-payment of mandatory contributions and the increased “informalization“ of the labor force. Oldage coverage (AFPs and the public scheme) is only 30% of the labor force mainly for dependent and high-income workers. Two thirds of the labor force continues without coverage. Thus, the pension system requires a profound restructuring to address issues such as the introd...

Explores how remittances, pensions and health care provided by Padomi, an office with the social security system, may affect the income security and well-being of old people in Peru. The demographic transition is moderate but accelerating due to a sharp drop in fertility rates, particularly in urban areas, and a rate of actual out-migration that may be larger than officially estimated by the INEI. The latter may imply that the demographic growth rate is half (0.7 percent) its reported rate (1.4 percent). Affiliation to the privately administered pension system has decreased and the national pension system is in actuarial imbalance which deters affiliation (dependency rate is 1 to 1). Thus, evasion to mandatory retirement savings will cause that by 2025, 77 percent of persons older than 65 will not have a pension. The demographic dividend that ends around 2025-30 presents an opportunity f...

This article assesses the pros and cons of a basic income grant and estimates the financial cost of paying a similar benefit to very specific groups in Peru. This is an old concept in the economic literature and is associated with a “negative income tax”. A universal basic income grant can be an adequate instrument to smooth consumption and distribute some purchasing power to the poor. The shift in effective demand after paying a basic income can have important multiplier effects on small local markets and on the creation of work opportunities. The exercise suggests that the implementation of such instrument should be gradual and accompanied by a substantial increase in general government revenues. Since a basic income policy can have a non-trivial positive impact in the reduction of poverty and in increasing both equity and social cohesion, its appropriateness should be given enough...

This article examines the hypothesis that the real exchange rate's appreciation in Peru and the export revenues related to the production of coca were strongly associated between 1985- 1990. This theory is based on the supposition that the influence of “narcodollars” caused dollar supply in the free exchange market to skyrocket and forced down the equilibrium price. However, the results of these estimations do not provide enough evidence to support this hypothesis.

El objetivo de la investigación ha sido estudiar el desempeño del sistema previsional entre 1996 y el 2013, proyectar su evolución hasta el 2050 y plantear lineamientos de una posible reforma previsional. El presente resumen tiene tres partes principales. En la primera se realiza un diagnóstico del estado de las pensiones en nuestro país tanto en el sistema privado como en el público. Este diagnóstico comprende, entre otros temas, una evaluación de los cambios en la legislación previsional de 1992 que dio origen al sistema privado, un análisis de la cobertura, las tasas de reemplazo, y las rentabilidades de los fondos previsionales. En la segunda sección, se realiza una proyección del número de jubilados, el tamaño de los fondos previsionales, la población con pensiones y la rentabilidad previsional hasta el 2050. Las proyecciones asumen tasas rápidas de crecimiento del s...

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