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Health is not a valid argument against raising the retirement age in Latin America

The nations that are experiencing the effects of demographic aging and its consequences turn to raise the retirement age attempting to maintain economic health

Hombre mayor sentado en una silla de madera

LatinAmerican Post Editorial Team 

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In many countries around the world, demographic aging and lowered retirement ages are draining social security systems. The demographic shifts towards population, which negatively affects social security systems, also threaten fiscal balance and the sustainability of health policy. Most commonly, the nations that are experiencing the effects of demographic aging and its consequences turn to raise the retirement age attempting to maintain economic health.

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Labor force participation decisions among older individuals around the world are influenced by the coverage, availability, and open-handedness of public pension systems, which determine the magnitude and timing of labor retirements. Other essential variables are the impact of social security policies and incentives and perceived wage sufficiency.

Now, even though the variables affecting labor force behavior and in developed countries is well known, relatively little is known about retirement and health in Latin America. Nevertheless, Latin American countries are following the rest of the world and raising the retirement age to maintain fiscal balance and sustain economic prosperity. However, Latin American countries must take into account both the decline in older adults’ labor force participation and the unfortunate health situation prevalent among those potentially affected by legislative changes.

As a result, population, demographic and aging experts from the Universidade Estadual de Campinas and the Universidade Federal de Minas Gerais, in Brazil, and Columbia University in the United States recently explored labor force participation and health trends in several Latin America countries over the last half-century. It is essential to highlight that employment potential at older ages is also dependent on health, with health problems being a compelling reason for earlier retirement; therefore, their analysis centered on two important health indicators: mortality risk and overall disease burden.

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The researchers found that the “greatly improved health conditions” of recent years in Latin America translate into lower labor force participation today than in the past, so that although contemporary male workers aged 55–59 have similar health statuses to their earlier counterparts aged 60–64, their patterns of labor force participation are very different.

Specifically, they first demonstrate clear health improvements in many Latin American countries (e.g., Brazil, Bolivia, Chile, and Costa Rica), showing that the mortality risk faced by a 65-year-old male worker in the 1970s is much higher than a contemporary counterpart. At the same time, the participation rate of older workers is much lower today than in the past.

We agree with the researchers’ interpretation of the numbers. The numbers presented indicate that for a large share of those not working beyond age 60, health is not the reason that explains them leaving the labor force. Therefore, we conclude that health is not a valid argument against raising the retirement age in Latin America.

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