From gender wage gaps to gender pension gaps: Do pension systems cushion gender gaps in active life?

Gender gaps in pensions have narrowed significantly in recent decades, both in terms of access and in the amounts received. Part of this reduction can be explained by the dynamics observed in the labor market. Previous work for developing countries show that gender differences in pensions are lower than those observed in wages. However, there is still little evidence, especially in developing countries, on the consequences that differences in labor market attachment and gender wage gaps have on the income received by men and women after retirement.  

In this paper we exploit the availability of matched longitudinal administrative records of work histories and social security in Uruguay to assess the extent to which the social security system attenuates or amplifies gender differences originated in the labor market. By adapting traditional tools for the analysis of income differentials, we evaluate how retirement and pension gender differences are linked to labor trajectories. In particular, we apply gap decomposition methods (Oaxaca and Blinder for the mean and Firpo-Fortín-Lemieux for the decomposition along the pension distribution) that have only been applied in developed countries for pension gaps. The explanatory factors of the retirement gaps include variables that describe labor trajectories. We consider contribution density, part-time work, and volatility indicators that reflect the propensity to change status (leaving formal employment, moving from part-time to full-time work, changing the branch or sector of activity). We further explore how the access to gender targeted policies, such as care credits, can reduce the observed differences in gender pensions.