The 2008 Chilean pension reform: Household financial decisions and gender differences

! ! A icle published in Jou nal o Economic Policy Re o m doi:10.1080/17487870.2020.1778475 The 2008 Chilean Pension Re o m: Household Financial Decisions and Gende Di e ences * Alessand o Bucciol Uni e si y o Ve ona [email p o ec ed] Ma ina Man è Uni e si y o Ve ona ma ina.man e@uni .i G ego io Gimenez† Uni e si y o Za agoza [email p o ec ed] Abs ac We e alua e he e ec o he 2008 pension e o m in Chile, applying a di e ence-in- di e ence es ima ion me hod o longi udinal su ey da a ep esen a i e o he Chilean popula ion. Ou e idence sugges s ha hose who s a ed o ecei e a basic pension inc eased hei deb mo e han hei asse s. We in e p e his as an indica o o deb sus ainabili y. The deb a io inc eased signi ican ly mo e o women, who may be pa icula ly exposed o inancial c ises. The esul s aise conce ns abou he po en ial inancial ulne abili y o he popula ion a ge ed by he e o m, due o o e - indeb edness. Keywo ds: Chile; Pension; Financial ulne abili y; Gende ulne abili y; Di e ence-in-di e ence. * This esea ch did no ecei e any speci ic g an om unding agencies in he public, comme cial, o no - o -p o i sec o s. Decla a ion o in e es s: none. The usual disclaime s apply. † Co esponding au ho : G ego io Gimenez. Pos al add ess: Uni e si y o Za agoza, Facul y o Economics and Business, G an Vía, 2 (50005) - Za agoza (SPAIN). Email: g[email p o ec ed] 2 ! 1. In oduc ion Recen changes in demog aphic ends and inc eased conce ns abou social wel a e ha e added u gency and pu pose o pension e o ms in bo h de eloped and de eloping coun ies (Ba ien os, 1998). As he long- e m consequences o popula ion aging ha e become e iden and mo e widely discussed, he e ec i eness o social pensions in imp o ing household wel a e has ecei ed conside able a en ion (Samwick, 2000). Pension e o ms mainly add ess he p oblem o low pension co e age wi hou imposing an excessi e bu den on he public inances. Howe e , hey may also be used o edis ibu e weal h o speci ic a ge g oups. This is he case in Chile, a coun y wi h gene ally highe sa ings a es han o he La in Ame ican coun ies (Mo andè, 1998), – albei wi h huge inequali ies (Engel e al., 1999). Wi h he 2008 e o m o he pension sys em, he Chilean go e nmen sough o imp o e he adequacy o pension pay-ou s o speci ic g oups o he popula ion, no ably he poo es households wi h a leas one membe olde han 65. Since 2008, hese households ha e been eligible o ecei e mo e income om pensions and use i o consump ion, sa ings and in es men s. The e o m aimed o s eng hen he social sa e y ne , os e solida i y and imp o e gende equali y (Ro man e al., 2008). Acco ding o Bo zu zky (2019), he e o m expanded co e age and, consequen ly, imp o ed social equi y. P e ious esea ch also indica es ha i inc eased indi idual spending, imp o ed sel - epo ed heal h (Be hman e al., 2011) and educed dependence on he labo ma ke (A anasio e al., 2011; Encina, 2013). Howe e , he consequences o he e o m in e ms o inancial inclusion has no been in es iga ed, al hough access o inance is a c i ical ac o o boos ing well being and equali y. Like in he case o o he go e nmen s in La in Ame ica, in he pas wo decades, he go e nmen o Chile has unde gone impo an ans o ma ions in he way i adop s public se ice p o ision. The e o ms b ough abou ha e s i ed o inco po a e a ci izen pe spec i e, in a e y complex con ex – cha ac e ized by globaliza ion, economic and poli ical ins abili y and ising inequali y. The new ou look ocuses on p oducing mo e public alue wi h g ea e e iciency, pu ing he in e es s o he “consume s” o public se ices a he cen e o he decision-making p ocess (OCDE/CAF/CEPAL, 2018). Wi hin he b oade e o m amewo k, a ci izen demand has been eme ging in Chile o he go e nmen o analyse he consequences o i s policies om a gende pe spec i e. 1 1 Resul o his in e es is he c ea ion o he Minis e io de la Muje y la Equidad de Géne o o Chile, in 2015, which has among i s unc ions “ o p omo e, coo dina e and e alua e he inco po a ion o he gende 3 ! The goal is o make isible and co ec gende imbalances in decision-making and o ensu e ha he se ices p o ided a e equally accessible o all ci izens and mee he needs o women and men alike. The aim o his pape is o e alua e he e ec s o he 2008 Chilean pension e o m on inancial ou comes. The Chilean pension e o m could a ec ci izens’ beha io and well-being, wo key elemen s in he deba es on public se ice p o ision and i s e o m. In pa icula , we wan ed o lea n how he a ge ed popula ion eac ed o he inc ease in he income s eam ia he e o m, and how beha io changed in ela ion o a ious inancial ins umen s. Did hose a ec ed by he e o m inc ease hei pa icipa ion in deb and asse ma ke s? Did pa icipa ion in deb and asse ma ke s change a a simila a e? Ou analysis pays special a en ion o women. Chilean women ha e adi ionally encoun e ed mo e di icul ies han men in accessing he labo ma ke (e.g., Rami ez and Ruben, 2015) and, as a consequence, hey ha e had mo e limi ed access o pensions. This led us o in es iga e whe he he e ec s o he pension e o m we e di e en o men and women, a e con olling o o he obse able cha ac e is ics. Did decisions a ec women and men di e en ly? Chile is a special case o wo easons. The i s is economic: i has unde gone apid economic g ow h wi h many p oblems o inequali y, pa ly because o i s libe al economic policies in ecen decades (including ax, labo and pension e o ms), qui e di e en om o he La in Ame ican coun ies (López and Mille , 2008). The second eason is echnical: he e ec o policy e o ms on inancial inclusion in La in Ame ican coun ies has no been widely in es iga ed, mainly due o he lack o da a. Few household su eys in de eloping coun ies collec in o ma ion on deb and asse s owne ship (Dee e and Ca anza i e, 2017), bu a la ge ep esen a i e Chilean su ey, Encues a de P o ección Social (EPS), o e comes his limi a ion. The su ey is unique in La in Ame ica, bo h due o i s me hodological igo and he amoun o in o ma ion on weal h and inancial ins umen s included. Ou esul s show a signi ican impac o he Basic Solida i y Pension (Pensión Básica Solida ia, hence o h PBS) on he access o deb , mo e han access o asse s. The e ec o he policy may be due o he cha ac e is ics o he a ge ed popula ion, comp ising poo households wi h a leas one membe olde han 65. The inc ease in he income s eam p o ided by he e o m may no be la ge enough o s imula e hei pe spec i e in he policies and plans o he a ious minis ies and se ices a he na ional and egional le els”. 4 ! pa icipa ion in inancial ma ke s; in con as , i may be ha he ecipien s used he PBS as a colla e al o acqui ing mo e deb , a he han using i as a way o inance new in es men s. Women inc eased hei deb and deb a io signi ican ly mo e han men. The emainde o he pape is o ganized as ollows. Sec ion 2 p o ides an o e iew o he exis ing li e a u e and desc ibes he Chilean pension sys em and he policy e o m. Sec ion 3 p esen s he da a and some summa y s a is ics. Sec ion 4 commen s on ou indings and Sec ion 5 concludes. 2. Backg ound 2.1. Li e a u e e iew: p e ious e o ms in La in Ame ican coun ies P e ious s udies on old-age po e y show low le els o pension co e age in mos La in Ame ican coun ies. Howe e , social secu i y has ecen ly become a cen al issue in he policy deba e (Ro man and Oli e i, 2012). O e he las h ee decades many coun ies in La in Ame ica ha e ca ied ou s uc u al e o ms o p i a ize hei pension schemes, wi h he p ima y aim o educing old-age po e y. Following he example o Chile, which pionee ed pension e o m in 1981, o he coun ies emb aced e o ms du ing he 1990s: Pe u (1993), Colombia and A gen ina (1994), U uguay (1996), Boli ia and Mexico (1997), El Sal ado (1998). The in oduc ion o p i a ized pension sys ems in La in Ame ican coun ies was expec ed o inc ease pensions o u u e bene icia ies and o accele a e sa ings, wi h posi i e consequences on economic g ow h (Wo ld Bank, 1994). Howe e , some claims abou he posi i e e ec s o such e o ms on social wel a e ha e been disp o ed by he e idence (Mesa-Lago, 2002). Fo example, Al ipa mako and Nedeljko ic (2018) show a posi i e, al hough limi ed, impac o pension p i a iza ion on agg ega e sa ings a es, bu ind no e idence o highe economic g ow h. O he au ho s highligh he exis ence o a ade-o be ween he e iciency o a e o m in limi ing pension deb and i s social cos s in e ms o wel a e educ ion: as pension p i a iza ion is cos ly o implemen , i may exace ba e inancial p essu es in he sho - o-medium e m (B ooks, 2007; Oli e a, 2016). Conce ns we e also aised abou he ansi ion p ocess, as i may in oduce inancial isks and in e gene a ional inequali ies ia he “double bu den” p oblem. Indeed, du ing he ansi ion pe iod, some indi iduals ha e o pay cu en e i ees’ pensions, in addi ion o hei own (A za, 2008). Ano he body o esea ch indica es ha go e nmen s mus look o o he al e na i es o educe old-age po e y. Fo example, cash ans e p og ams ocused on 5 ! he elde ly may be mo e e ec i e han s uc u al pension e o ms in educing po e y (Ba ien os and Lloyd-She lock, 2003; Ba ien os, 2006; Case and Dea on, 1998). Indeed, some non-con ibu o y pension schemes ha e become popula in La in Ame ica (Oli e a and Zuluaga, 2014). Among La in Ame ican coun ies, only Boli ia p o ided, om 1997, a uni e sal basic pension o all esiden s abo e a ce ain age ega dless o income o asse s, called BONOSOL. In he 1990s, ollowing he manda e in he 1988 Cons i u ion o p o ide pensions o he elde ly in u al a eas, B azil began o o e cash ans e s o elde ly indi iduals who had wo ked in he in o mal sec o , ag icul u e, ishing o simila ac i i ies. In Mexico, he ede al go e nmen in oduced a social secu i y p og am in 2007, known as “70 y Más“, p o iding a cash ans e o u al adul s o e he age o 70. In he mid-2000s, A gen ina adop ed he “Mo a o ium” p og am o he inclusion o he sel -employed in e i emen age wi hou su icien yea s o con ibu ion. Since 1974 Cos a Rica has ca ied ou an expensi e social p og am o assis he poo o e he age o 65. B ooks (2007) indica es ha he cos s o cash ans e p og ams o he elde ly in La in Ame ica a e low, ypically less han 1 pe cen o GDP, and a gues ha e ocusing pension e o m on po e y educ ion would con ibu e o a much-needed eo ien a ion o social policy in La in Ame ica. 2.2. The his o y o he Chilean Pension Sys em Chile is one o he La in Ame ican coun ies ha ha e e o med hei pension sys ems mo e adically o e he yea s. Un il 1981, he Chilean pension sys em was o he de ined bene i ype, inanced on a pay-as-you-go basis. Subsequen ly, i was e o med unde he Pinoche egime, when he labo minis e Piñe a a gued ha he de ined bene i scheme was inancially unsus ainable in he long e m. In May 1981, he pension sys em was changed in o a ully- unded, de ined con ibu ion sys em, in which wo king people we e equi ed o alloca e 10% o hei income om employmen o indi idual pension accoun s. Fo he ollowing 30 yea s, indi idual pension accoun s we e managed by p i a e-sec o p o ide s, so-called Pension Fund Manage s (AFPs, Adminis ado as de Fondos de Pensiones). Wo king people we e equi ed o con ibu e o a leas 20 yea s in o de o be eligible o a gua an eed minimum pension (Be hman e al., 2011). The new p i a e sys em was expec ed o oblige p i a e sa ings, unded by wages, hus imp o ing e iciency and educing adminis a i e cos s (Mesa-Lago and Be anou, 6 ! 2016). Howe e , his sys em u ned ou o be unable o mee he pension needs o a coun y like Chile, wi h many sel -employed and in o mal wo ke s (López Ga cía, 2015). The new sys em was also c i icized o p e en ing he s a e om p o ec ing pensions; i made wo ke s mo e ulne able due o he unce ain y o he indi idual pension and he decline in ba gaining powe . Social inequali y emained o ac ually inc eased because pe iods o unemploymen penalized pension en i lemen s; he s uc u al e o m also agg a a ed gende inequali ies (Mesa-Lago and Be anou, 2016). 2.3. Chile’s 2008 pension e o m Poo co e age, as well as low pension bene i s and high adminis a i e cos s, in ensi ied he need o pension e o m o supplemen he de iciencies o he p i a e pension sys em. Hence, in 2008 Chile pionee ed a “ e- e o m” o ex end co e age o speci ic subg oups o he popula ion, no ably he poo es and he elde ly, aising pension pay-ou s and inc easing gende equali y (Mesa-Lago, 2014). The 2008 e o m was designed o imp o e solida i y in he compulso y and olun a y pilla s o he old pension scheme by in oducing wo new componen s (Encina, 2013): he PBS and a op-up pension (Apo e P e isional Solida io). The PBS kicked o in July 2008. I p o ides a basic pension o all households i) wi h a leas one membe o e 65, ii) in he 40% less a luen po ion o he popula ion 2 and iii) ha do no sa is y minimum con ibu ions equi emen s. 3 A po e y sco e called he “Ficha de P o eccion Social” ( om now on, FPS) is used o de e mine he less a luen popula ion; a household is conside ed eligible o PBS when he FPS is 12,666 poin s o lowe . The PBS p o ided eligible households wi h abou USD 105 mon hly, eaching USD 156 in July 2011 (Encina, 2013). Bene i s a e inanced by he go e nmen h ough a Solida i y Fund and, in pa , by local municipali ies and Pension Fund Manage s (Be hman e al., 2011). The addi ional componen in oduced in 2008 was a wel a e pension aimed a sus aining consump ion o hose wi h incomple e con ibu ions his o ies in he old pension sys em (A anasio e al., 2011). Pa o he exis ing li e a u e in es iga es he e ec o ecei ing addi ional pension bene i s, such as PBS, on consump ion. Howe e , Be hman e al. (2011) ind li le e idence o c owding-ou 2 The subsidy was g adually ex ended, eaching he poo es 60% o he elde ly popula ion by he end o 2011, as de e mined by a po e y sco e called he “Ficha de P o eccion Social”. 3 En i lemen o he bene i includes a leas 20 yea s esidency and esidence in he coun y o a leas ou o he i e yea s p io o he e o m (OECD, 2017). 7 ! p i a e ans e s: whils indi iduals ecei ing PBS decla e an imp o emen in sel - epo ed heal h, he e ec s on ciga e e consump ion, alcohol in ake and he pu chase o consume du ables a e small and no s a is ically signi ican . Mo eo e , a e implemen a ion o he e o m, hey ind a signi ican educ ion in hou s wo ked pe week among indi iduals ecei ing PBS. Simila ly, Encina (2013) p o ides e idence o highe wi hd awals om he labo ma ke among indi iduals ecei ing PBS, wi h longe pe iods o inac i i y and lowe con ibu ion a es. Whils acknowledging he posi i e e ec o addi ional pension bene i s on sel - inanced pension weal h, A anasio e al. (2011) eco d a educ ion in o mal labo ma ke pa icipa ion a e he e o m, signi ican ly highe o women. Mo e ecen ly, Wong (2016) inds an inc eased incen i e o lea e he o mal sec o and o e ade axes a e he e o m, whe e people expec ed o ace an inc ease in hei implici ma ginal ax a e. Despi e he g owing in e es in he e ec o he 2008 Chilean pension e o m on he economic beha io o consume s, ela i ely li le is known abou he impac o addi ional pension bene i s, such as PBS, on inancial decisions. This esea ch con ibu es o illing his gap. 3. Da a O e iew 3.1. Encues a de P o ección Social (EPS) We use Chilean da a om he Encues a de P o eccion Social (hence o h, EPS). The EPS is he la ges longi udinal su ey in Chile, wi h a sample o a ound 16,000 esponden s om all egions in he coun y. Since 2002 and up o he ime o w i ing, i e wa es ha e been ca ied ou . Da a a e collec ed by he Mic oda a Cen e o he Uni e sidad de Chile, in collabo a ion wi h he Chilean Subsec e a ía de P e isión Social unde he guidance o a esea ch eam om he Uni e si y o Pennsyl ania. The EPS ga he s in o ma ion on indi iduals o e he age o 15 and ep esen a i e o he Chilean popula ion. In addi ion o socio-demog aphic in o ma ion, i includes da a abou employmen and social secu i y his o y, amily composi ion, heal h, weal h and inancial ins umen s. 3.2. Sample selec ion We ocus on he wo EPS wa es collec ed immedia ely be o e and a e he 2008 pension sys em e o m: he 2006 and 2009 wa es. The 2009 wa e allows us o s udy he 8 ! sho - e m e ec s o he policy e o m. 4 Ou da a include one esponden pe household, and we es ic ou a en ion o indi iduals aged less han 90 o a oid ou lie s in he da a. We also conside esponden s who comple ed he su ey in bo h yea s 2006 and 2009, o ensu e ha di e ences o e ime a e ep esen a i e o changes in esponses a he han changes in sample composi ion (Be hman e al., 2011). Ou sample comp ised wo g oups ( ea men and con ol) wi h simila cha ac e is ics. The ea men g oup includes indi iduals who ecei ed he pension bene i PBS in 2009; ollowing Encina (2013), he con ol g oup includes indi iduals who did no ecei e PBS in 2009, bu could ha e been eligible based on ou in o ma ion. In pa icula , we conside esponden s olde han 65 a he ime o he implemen a ion o he e o m, and wi h an FPS sco e o 12,666 poin s o lowe (Beh man e al., 2011). 5 This second equi emen ensu es ha he ea men and con ol g oups ha e a simila le el o economic wellbeing. Any u he easons o he eceip o PBS a e conside ed exogenous o his s udy. The FPS sco e is an index measu ed a he household le el which e lec s he abili y o gene a e income based on economic needs (He e a e al., 2010). The highe he sco e, he be e he economic condi ion o he household. The o mula used o calcula e he index is no publicly a ailable, bu i is known ha i is based on a wide se o socio- economic cha ac e is ics, such as household size and composi ion, income, heal h s a us and yea s o educa ion (A anasio e al., 2011). In 2009, he su ey asked indi iduals whe he hey illed in he FPS, and i so o epo hei FPS sco e. Howe e , only 12% o he esponden s epo ed he sco e. In ou analysis, we ollow he app oach p oposed by Wong (2016) o p edic he FPS sco e as a unc ion o he socioeconomic componen s lis ed abo e. We hen es ima e he ollowing equa ion based on 2009 da a o hose who epo ed hei FPS sco e: 4 Un o una ely, we we e no able o use EPS wa es a e 2009. In pa icula , he Subsec e a ía de P e isión Social desc ibes he 2012 wa e as an “incomple e p oduc ” and does no ecommend i s use o s a is ical in e ence pu poses, due o he le el o e o his may en ail. See www.p e isionsocial.gob.cl/sps/biblio eca/encues a-de-p o eccion-social/bases-de-da os-eps/. Da a p io o 2006 a e eliable, bu include in o ma ion only on a subse o asse s, liabili ies and income sou ces in ou sample. We use 2004 da a in some obus ness checks. 5 As obus ness checks, in ou analysis we also conside wo al e na i e con ol g oups comp ising indi iduals who do no mee he equi emen s o elegibili y, i.e., indi iduals in he age ange 60-65 and indi iduals who did no ill in he FPS. The con ol g oup may no ha e ecei ed PBS because households did no apply (p obably unawa e o he oppo uni y) o hey we e al eady ecei ing o he pensions om he go e nmen . We do no belie e any households ailed o apply because unin e es ed in accessing asse s and deb ma ke s. The PBS p o ides a mone a y incen i e, no ma e how i is used. 9 ! 𝐹𝑃𝑆!= 𝛽"+ 𝛽#𝐴𝑔𝑒!+ 𝛽$𝐻𝑜𝑢𝑠𝑒ℎ𝑜𝑙𝑑1𝑠𝑖𝑧𝑒!+ 𝛽%𝐻𝑒𝑎𝑙𝑡ℎ! +𝛽&𝐼𝑛𝑐𝑜𝑚𝑒!+ 𝛽'𝐸𝑑𝑢𝑐𝑎𝑡𝑖𝑜𝑛!+ 𝜀! (1) whe e 𝐹𝑃𝑆! is he p edic ed ulne abili y indica o o household i a e implemen a ion o he e o m. Reg ession esul s, gi en in supplemen a y ma e ial accompanying his a icle (Table A.1), a e based on a obi model o acknowledge ha he dependen a iable may no be nega i e. We hen used p edic ions om he abo e equa ion o associa e each indi idual wi h a 2009 FPS sco e. The p edic ed FPS sco e (in ou da ase : a e age 7,099.17, s anda d de ia ion 629.05) is used o de e mine eligibili y o he new pension bene i s, i.e., ollowing he o icial ules, hose who epo a FPS sco e o 12,666 poin s o lowe (in ou da ase : 86.34 pe cen o he households) a e conside ed eligible. Figu e 1. Dis ibu ion o FPS in he ea men and con ol g oups As a esul o his sample selec ion, ou inal benchma k sample consis s o 4,316 obse a ions on 2,158 indi iduals, wi h 688 obse a ions (15.94%) in he ea men g oup. Figu e 1 plo s he dis ibu ion o FPS in ou sample, sepa a ely o he ea men 16 ! some people used he PBS as colla e al o acqui ing mo e deb , a he han using i as a way o inance new in es men s. The analysis ca ied ou so a e alua es he e ec o he policy e o m by looking sepa a ely a holdings and he amoun s o deb and asse s. Knowing he exis ence o an unde lying ela ionship be ween deb and asse size, we now ake a di e en app oach o assess he impac o PBS on he inancial beha io o households. We conside as dependen a iable he household deb - o-asse s a io, which ep esen s o al ou s anding household deb di ided by o al asse s. 8 We compa e he amoun o deb wi h he amoun o asse s o ob ain an indica o o household deb sus ainabili y. Indeed, he highe he deb - o-asse a io, he highe he le el o household le e age, and he weake he inancial posi ion. We ca y ou he eg ession wi h ou pu shown in Table 3. Column 1 measu es he likelihood ha deb exceeds asse s, while Column 2 akes as a dependen a iable he a io be ween deb and asse s. A p obi model is used in Column 1 and an OLS model in Column 2 in line wi h he na u e o he dependen a iable (bina y in Column 1 and con inuous in Column 2). Bo h analyses show ha , wi h PBS, he ea men g oup has ela i ely mo e deb : he p obabili y o ha ing mo e deb han asse s inc eases by 6% (Column 1, al hough he coe icien is signi ican a 10% only), and he deb - o-asse a io is 33.1% highe (Column 2). 8 Following he OECD de ini ion, a ailable a (accessed June 12 2019): h ps://www.oecd.o g/sdd/na/s a is icalinsigh swha doeshouseholddeb sayabou inancial esilience.h m 17 ! Table 3. Reg ession ou pu : deb and asse s compa ison (a e age ma ginal e ec s) (1) (2) Me hod P obi OLS Dep. a iable Deb > Asse s Ln(Deb a io) T ea men -0.140*** -0.745*** (0.028) (0.117) A e 0.044*** 0.132* (0.012) (0.079) T ea men x A e 0.062* 0.331** (0.035) (0.162) Age -0.010*** -0.050*** (0.001) (0.006) Female 0.012 0.055 (0.015) (0.090) I pa ne 0.068*** 0.413*** (0.015) (0.087) Highe educa ion 0.108*** 0.771*** (0.030) (0.270) Wo ked in he pas 0.086*** 0.562*** (0.017) (0.129) ln(Income) -0.004 -0.027* (0.003) (0.015) Good heal h -0.008 -0.072 (0.014) (0.088) Home owne 0.004 0.065 (0.019) (0.111) Cons an 4.573*** (0.492) Indi iduals 2,158 2,158 Obse a ions 4,316 4,316 Pseudo R-squa ed 0.051 R-squa ed 0.050 No e: S anda d e o s in pa en heses; *** p<0.01, ** p<0.05, * p<0.1. All in all, ou indings indica e ha he in oduc ion o PBS s imula es he accumula ion o deb mo e han he accumula ion o asse s. We pe o m se e al es s o check he obus ness o his esul . The es ima ions can be ound in he supplemen a y ma e ial ha accompanies his a icle (Tables A.3 o A.5). As i s obus ness check, we un wo “ ake” expe imen s o see i ou indings a e d i en by chance. One dis inguishes be ween ea men and con ol g oups based on one obse ed demog aphic a iable: being single o ha ing a pa ne . Ano he conside s he sample yea s 2004 and 2006 and we a i icially se he yea in which he policy ook place a 2005, al hough he ea men g oup emains he sub-sample o households who e en ually ecei ed PBS. As he second obus ness check, we use an al e na i e way o accoun o FPS by means o a p incipal componen analysis, aking in o accoun he same explana o y a iables conside ed in Equa ion (1). Finally, we ca y ou he 18 ! analysis using al e na i e de ini ions o he con ol g oup: households in he age ange 60-65, o households ha did no ill in he FPS (and would p obably ge high sco es). 9 The obus ness checks a e in line wi h he ou come o ou benchma k analysis. 4.3 Gende di e ences Like mos o he componen s o social p o ec ion sys ems, pension e o ms can ha e a signi ican impac on gende equali y and examining his may gi e a ulle iew o he e ec i eness o he policy (A za, 2012). Chilean women ha e adi ionally had less access o c edi and asse s han men, due pa ly o lowe employmen a es han in de eloped coun ies (e.g., Ramí ez and Ruben, 2015). This has impo an implica ions in e ms o dependence and economic and social well-being. Hence, gende analysis o he consequences o he Chilean pension e o m on deb and asse s accumula ion is o g ea in e es . Tables 2 and 3 show no signi ican gende e ec s. Howe e , he coe icien s o he gende a iable we e ob ained ne o di e ences in e ms o socio- demog aphic cha ac e is ics. In ou sample emales a e less equen ly highly educa ed (3.70% agains 5.43%) and on a e age ha e lowe incomes (USD 7,253 agains 7,452). Mo eo e , hey a e less likely o li e wi h a pa ne , o wo k and be in good heal h. Table 4 shows he a e age amoun o deb and asse s by gende , be o e and a e he pension e o m. Unlike ou p e ious analyses, his ime he gende compa ison does no con ol o di e ences in income o o he cha ac e is ics. We see ha women who ecei ed he PBS had he la ges inc ease in he amoun o deb among all g oups (138%), and he la ges dec ease in he amoun o asse s (-81%). This led o a sizable inc ease in hei deb a io, he la ges o all g oups. The inancial beha io o men aking ad an age o he PBS was e y di e en ; hey educed hei amoun o deb and asse s by 57% and 20%, espec i ely. 9 The gene al aim o he ulne able o poo illing in he FPS is o gain access o subsidies and bene i s om he go e nmen (He e a e al., 2010). We assume ha hose who did no ill in he FPS a e mo e a luen and an icipa e high FPS sco es, excluding hem om he bene i s. 19 ! Table 4. A e age amoun o deb and asse s by gende . Cons an 2009 USD Con ol g oup T ea men g oup Amoun o deb in Amoun o asse s in Amoun o deb in Amoun o asse s in 2006 2009 ∆ deb 2006 2009 ∆ asse s 2006 2009 ∆ deb 2006 2009 ∆ asse s Men 585 981 68% 1,381 902 -35% 134 58 -57% 64 51 -20% Women 331 357 8% 514 383 -25% 71 169 138% 160 30 -81% The gende di e ences we obse e in deb and asse s may be a consequence o he pension e o m; howe e , i could also be due o di e ences in he o he p edic o s o he model. To compa e o wha ex en he di e ences in he inancial beha io o men and women can be a ibu ed o he e o m, we es ima e he p edic ed mean o holding p obabili ies and he amoun s o deb and asse s a e con olling o he es o he p edic o s. Figu e 2 shows he esul s. All hose indi iduals who ecei ed he PBS inc eased bo h hei deb and asse s mo e han hose who did no ecei e he bene i ( he only excep ion was he likelihood o women holding asse s). Figu e 2. Adjus ed linea p edic ions o deb and asse s posi ions No e: Reg esso s cons an a hei means. 20 ! All in all, he s eepness o he lines sugges s signi ican di e ences in he e ec o he PBS on men and women. Table 5 es ima es he slopes o each line. This is he e ec o ecei ing PBS on deb and asse s (p obabili y and amoun ) while keeping he emaining eg esso s cons an a hei means. The e ec on women who ecei ed o did no ecei e PBS is e y s eep and s a is ically signi ican in he case o deb and deb a io (indica ing a weake inancial posi ion) and no signi ican o asse s. No e ec s a e signi ican o men. Table 5. Con as s o ma ginal linea p edic ions: Di e ences be ween hose who ecei ed he PBS and hose who did no Deb p obabili y Deb amoun Asse s p obabili y Asse s amoun P obabili y deb > asse s Deb a io Ln(Deb a io) Men 0.005 0.084 0.008 0.031 0.066 0.139 (0.161) (0.232) (0.182) (0.158) (0.173) (0.226) Women 0.274** 0.433** -0.084 -0.003 0.278** 0.426** (0.122) (0.192) (0.161) (0.139) (0.134) (0.185) No e: Reg esso s cons an a hei means. S anda d e o s in pa en heses; *** p<0.01, ** p<0.05, * p<0.1. We conclude ha ecei ing PBS has di e en e ec s on he inancial beha io o men and women: women inc eased hei deb and deb a io signi ican ly mo e. The consequences in e ms o well-being may be signi ican , since consump ion o basic goods and medical ea men may be a ec ed, as well as psychological well-being and he abili y o cope wi h unexpec ed expenses. Since he pension e o m a ge s he low-income elde ly popula ion, ou esul s sugges ha poo elde ly women a e a pa icula ly ulne able g oup. To unde s and he la ge inc ease in he deb o poo elde ly women, we should app ecia e ha PBS ep esen s a adical change in hei economical si ua ion. Financial ins i u ions impose mo e obs acles on women in accessing c edi (Gideon, 2006). In addi ion, women ace highe ansac ion cos s due o hei signi ican domes ic wo kload and social es ic ions, which limi hei mobili y and abili y o handle he cos s o a loan applica ion (Zúñiga Eaglehu s , 2004). Ob aining he PBS gi es hem sol ency and educes hese ansac ion cos s, leading women o eques mo e c edi s. The e o e, his ype o pension e o m can be seen as an ins umen o de eloping he inancial inclusion o women, p omo ing hei access o c edi . Howe e , a he same ime, excessi e indeb edness has many po en ial dange s and hese dange s a e mo e se ious 21 ! in hei case, since a ious s udies o de eloped and de eloping coun ies show ha women ha e lowe le els o inancial li e acy han men (Lusa di and Mi chell, 2008; Buche -Koenen e al., 2014; Mejía and Rod íguez, 2016). Pension e o ms a e a good oppo uni y o in oduce inancial li e acy p og ams and de elop inancial p oduc s ha ake in o accoun he speci ic needs o women. 5. Conclusions We use Chilean da a om a la ge ep esen a i e su ey called Encues a de P o ección Social o in es iga e whe he he inc ease in he income s eam esul ing om he 2008 pension e o m a ec s pa icipa ion in he deb and asse ma ke s. We also explo e he e ec o he Chilean pension e o m on inancial ou comes sepa a ely by gende . Explo ing hese issues may gi e a ulle iew o he e ec i eness o he policy. We ound ha hose who had ecei ed a basic pension inc eased hei deb . Signi ican ly, hey inc eased deb p opo ionally mo e han asse s. One explana ion could be ha access o he inancial ma ke o he ea men g oup was ini ially low ( hey we e pa ially excluded), and inc eased wi h he e o m. As a esul , indi iduals acqui ed mo e inancial c edibili y and used he PBS as colla e al o acqui e mo e deb , a he han using i o inance new in es men s. Ou indings also e eal ha women inc eased hei deb and deb a io signi ican ly mo e han men, leading o a weake inancial posi ion. This esul has impo an consequences in e ms o social well-being. As poo women a e a pa icula ly ulne able g oup in Chile, his may help o pe pe ua e inequali y. Ou esul s indica e bo h posi i e and nega i e impac s o he e o m on indi iduals. On he one hand, highe household bo owing could be an impo an sou ce o economic e iciency, inc easing in es men oppo uni ies and, consequen ly, enhancing mac o- inancial s abili y. Financial inclusion has become a opic o inc easing impo ance o policy make s, gi en i s c i ical ole in educing po e y and os e ing de elopmen (Wo ld Bank, 2014; Cli on e al., 2017; Ka a and Molyneux, 2017). In his sense, he PBS can play an impo an ole as an economic ins umen o p omo e inancial inclusion by inc easing household access o consume c edi wi h posi i e consequences on social wel a e. Thus, posi i e impac s ela e o he abili y o pu chase goods, and no ably access o inancial ins umen s gene ally a ge ed on 22 ! weal hy consume s. P o iding poo people wi h new inancial ins umen s helps hem o deal wi h po en ial income se backs and educes hei inancial ulne abili y. Nega i e impac s include p oblems o deb sus ainabili y, as he use o hese new inancial ins umen s inc eases he isk o insol ency. Indeed, long- e m excessi e p i a e deb exposes households o inancial isks and po en ial economic se backs ha can lowe hei spending, wi h a nega i e impac on he g ow h a e o he coun y (Reinha and Rogo , 2010). This is e en mo e signi ican in eme ging ma ke economies, whe e deb secu i ies ha e only ecen ly been in oduced (Ha o i and Taká s, 2015). Financial ulne abili y aises conce ns abou he deb sus ainabili y o he poo es households in hese economies. I also has impo an implica ions in e ms o wel a e policies, since he consump ion o basic goods and medical ea men , he abili y o cope wi h unexpec ed expenses and psychological well-being may all be a ec ed. In his ega d, public in e en ions ocusing on inancial educa ion, building us in inancial ins i u ions, p o iding adequa e o mal sa ings p oduc s and c edi ins umen s, and s imula ing heal hy sa ings habi s can os e inancial inclusion and gene a e bene i s o he socie y as a whole (Ca allo and Se eb isky, 2016). Emphasis is also placed on he g owing complexi y o new inancial ins umen s. Indeed, he lack o p ope inancial knowledge and decision-making skills p e en s people om he a ailabili y o new inancial se ices, possibly inc easing hei exposu e o economic and poli ical down u ns. Fu he s udies a e needed in o de o conclude which o he wo e ec s is mo e signi ican . This pape has wo main limi a ions. Fi s , due o he lack o da a a e 2009 and he limi ed amoun o in o ma ion a ailable be o e 2006, we a e unable o comple ely es he pa allel end assump ion implici in ou di -in-di me hodology. Howe e , we belie e ha ou app oach, which cons uc s a con ol g oup made o indi iduals po en ially eligible o FPS, compa es g oups o people wi h simila cha ac e is ics be o e he policy change ook place. Second, we do no ha e he o iginal FPS sco es o mos o he households, obliging us o make some assump ions. Howe e , ou esul s seem obus o he al e na i e checks we ca ied ou (p edic ions ob ained h ough eg essions, p incipal componen analysis and sel -decla a ions in he su ey). Mo eo e , we a e awa e ha he consequences o his kind o e o m some imes ake a long ime o become mani es . Hence, i would be use ul o u u e esea ch o assess he e ec s o he e o m in la e pe iods. 23 ! Policy highglig s • Resul s con ibu e o aise conce n abou side e ec s o he Chilean pension e o m • Resul s also make isible gende imbalances in decision-making • Pension e o ms cons i u e a good oppo uni y o in oduce inancial li e acy p og ams • The ou comes call o inancial p oduc s ha conside he speci ic needs o women 24 ! Re e ences Al ipa mako , N., Nedeljko ić, M., 2018. Does pension p i a iza ion inc ease economic g ow h? E idence om La in Ame ica and Eas e n Eu ope. Jou nal o Pension Economics and Finance, 17(01), 46-84. A za C., 2008. 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