Published in German as: "Chile: Die Revolution des Alterssicherungssystems trägt

At age 18, Chile’s pension revolution – exported throughout Latin America and beyond – is entering adulthood. Tested by vastly different macroeconomic, financial, and political environments during 1981-1999, the radical overhaul of Chile’s pension system is paying off. Capital and labor markets operate more efficiently and national saving, TFP growth, and aggregate growth have increased. But the largely privately-managed and strictly regulated fully-funded pension system also shows some flaws regarding its microeconomic incentives and performance. This paper takes stock of the Chilean pension system’s accomplishments and shortcomings. It provides a quantitative assessment of the pension reform’s macroeconomic and growth benefits and a qualitative review of its microeconomic problems, pointing out areas of necessary reform