It is usually accepted that a pure NDC scheme is not adequate to protect individuals against the risk of poverty in old age, because it does not incorporate any redistribution of the system`s revenue. However, we show that insufficient coverage and weak social protection can be more serious...

In Uruguay, the pension programs cover over 90% of the elderly. Men are more likely to be eligible for the contributory pensions, while women are over-represented in the assistential and survivor pension programs. This difference is linked to the fact that women tend to have longer spells out of...

Governments usually play an active role in helping the less fortunate. The results, however, seem to be mixed. Some have been considered quite successful, while others have been less so. The aim of this paper is to provide a unified theoretical framework to analyze these experiences. The...

We argue that societies sometimes choose not to enforce the law to gain “flexibility”. Especially developing countries face a dilemma between discretion and commitment to only partially-contingent rules. Rules are good for incentives, but discretion may be more “flexible”. We embed this...

Excess distortions in the welfare state might result from the government lack of ability to commit not to help unlucky agents. Incentive considerations that are crucial in standard insurance in the presence of moral hazard play no role in this case. A benevolent government that sets transfers...

Labor market policies and institutions affect the success of economic reform but probably more for political than for economic reasons. Growth appears not to be hurt by minimum wages and mandatory benefits. But the relative size of organized labor (in government and elsewhere) is crucial....

Benevolent governments lacking commitment ability provide too much insurance, if opportunistic private agents free ride on the government's concern and exert too little effort expecting government assistance. Yet, the costs of implementing the transfer policy work as a commitment device,...

In this paper we analyze the recent performance, perspectives and some policy options for two public social security programs in Uruguay: pensions and unemployment insurance.We review the impact of these programs on public expenditure, including recent and expected future trends, and on income...