Social protection and the market: The political economy of pension reform in an era of capital mobility (Argentina, Brazil, Mexico, Uruguay)

In the 1990s, transformations in economic and demographic structures strained public systems of old-age pension provision around the world. Some governments responded to these pressures by revising the parameters of existing pension schemes, while others followed the encouragement of international banks and market actors and privatized their public old age pension systems. A new cross-national data set on pension privatization reveals systematic variation in both the decision to privatize pensions and the degree of market-orientation among the privatizing countries. Using a selection model, analysis of this data shows that the decision to privatize old age pensions is shaped by three factors: (1) whether the cost and structure of the old pension system makes the reform fiscally viable; (2) how the domestic capital accumulation and economic vulnerability create incentives and constraints on the reform decision; and (3) the concentration of legislative power. Qualitative analysis, based on field research in Argentina, Brazil, Mexico and Uruguay reveals how these three factors shaped the decision to privatize and the design of new private pension schemes across nations.