Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/141625
Authors: 
Madrigal, Lucia
Pagés, Carmen
Suaya, Agustina
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 9866
Abstract: 
As the population ages, low and unequal social security coverage are among the most pressing challenges in the Latin American region. On average, only 45% of workers contribute to social security, and this figure is much lower for low-income and low-skilled individuals. There are many hypotheses for this limited and uneven coverage. This paper studies two of them: First, we test whether individuals do not contribute to social insurance because, due to myopia or limited information, they place little value in social insurance. Second, we test whether low-income, low-skilled individuals have a lower value of social insurance than higher-income or higher-skilled individuals. Using an indirect method to estimate individual social security valuation based on self-reported job satisfaction, we find that workers attain higher job satisfaction in formal than in informal jobs in Peru but not in the case of Mexico. In addition, we find little evidence that the value of social insurance increases with income or education. If anything, the opposite is the case, with lower-income or lower-education individuals deriving higher utility from having access to social insurance.
Subjects: 
job satisfaction
informality
social insurance
Latin America
JEL: 
J21
J28
O17
Document Type: 
Working Paper

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