Regulating Markets for Retirement Products: Evidence from Chile

Project: Research project

Project Details


Private annuities have the capacity to significantly improve retiree welfare by providing them with
secure income in retirement. They are becoming even more valuable as retirees face longer lifespans
and fewer employer-provided defined benefit pensions. Regulation of these markets can
play an important role in affecting annuity prices, and in turn in broadening access to annuities
across wealth levels. We study the unique regulatory regime introduced in Chile, which institutes a
government-run exchange for annuities intended to intensify competition and facilitate information
sharing between firms and consumers without placing significant restrictions on the market. The
design of Chile’s market has resulted in low prices and a high voluntary annuitization rate compared
to international averages. Using cutting edge structural estimation techniques and unusually
rich administrative data, we separately identify demand for, and supply of, annuities in Chile as a
function of regulatory and market characteristics. These estimates are subsequently used to shed
light on the welfare and distributional effects of alternative regulatory regimes, including limits on
price discrimination, restrictions of consumer choice sets, and the elimination of the governmentrun
Effective start/end date5/1/179/29/18


  • Boston College (5002110-S4 // 5 RRC08098402-08-00)
  • Social Security Administration (5002110-S4 // 5 RRC08098402-08-00)


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