Preliminary steps for projecting public pensions’ sustainability : calibrating a dynamic microsimulation model for the prospective and retrospective simulation of Argentina’s labour market (2003-2014)

Mercredi | 2015-02-11
salle B103, 12h-14h

Leonardo Eric CALCAGNO

The aim of this paper is to lay the foundations of a prospective analysis that will draw perspectives on Argentina’s Pay-As-You-Go pension system. After a brief description of the country’s pension system, this paper develops a dynamic microsimulation model and calibrates it with a household-level quarterly survey data, the EPH. The calibration is done both on a micro level (by modelling individual transition probabilities between labour-market states) and on a macro level (by trying to reproduce the gross occupation of the working age population by age, gender and education as observed in the 2003-2014 period). In the end, we have obtained a model that makes a realistic projection of the labour career of each individual in our survey up to the year 2040. Once our retrospective simulations are complete, we will be able to reconstitute their labour career, an information that is currently unavailable. With this, we will be able to compute the total amount of contributive years each individual has validated once he reaches retirement age in the 2014 – 2040 period. This would lay the basic framework for future projections on Argentina’s pension system’s mid to long-term sustainability.