Work Disincentives for Women in Old Age Security Systems and How to Ameliorate Them Prepared for the Gender and Development Unit, World Bank

This paper analyzes features of social security systems that are ostensibly designed to help women but have the perverse effect of discouraging their labor force participation and investment in their labor market careers. Some of these provisions stem from explicit differentiation between men and women--for example, an early allowable retirement age for women is quite common. Simulations show that this reduction in expected years of work decreases women’s opportunities for on-the-job training, wages and pensions. Many other social security rules do not explicitly differentiate between men and women but have different effects on the genders because of their contrasting demographic characteristics and social roles. For example, women’s lower wages and employment histories means that they benefit disproportionately from safety net arrangements in social security systems—but phase-out rules and penalties on marginal work to those receiving minimum or means-tested pensions create disincentives for continued employment among low-earners, many of whom are women. Women’s greater longevity means that they are likely to become widows and to gain from survivors ’ benefits, bu