Title page
Contents
Abstract 4
Résumé 4
1. Informality and existing social protection policies 7
1.1. An overview of informality at the household level 8
1.2. Expanding social protection schemes during the COVID-19 crisis 11
1.3. Social spending varies widely across LAC economies 13
1.4. Most LAC economies have low tax revenues 15
2. Breaking the vicious circle: Better social protection for more workers 16
2.1. The link between social protection and informal employment 17
2.2. A proposal for a re-design of pension systems to fight old-age poverty and reduce informality 20
2.3. Working-age transfers 24
3. Policy options and implementation challenges 30
References 36
Table 2.1. Pension coverage for those aged 65+ in Latin America, 2020-22 20
Table 2.2. Legal and Effective Coverage of Social Protection Systems 24
Figure 1.1. Distribution of informal workers at the household level, selected LAC economies 9
Figure 1.2. Distribution of population, by the degree of the informality of households, latest year available 10
Figure 1.3. Distribution of formal and informal workers by the degree of the informality of their households 11
Figure 1.4. Share of workers without social insurance or social assistance coverage 12
Figure 1.5. Types of expansion of social protection systems in LAC countries 13
Figure 1.6. Public Social Expenditure on social protection, in % of GDP in 2019 14
Figure 1.7. The cumulative discretionary fiscal response to Covid-19 has been substantial 14
Figure 1.8. Tax-to-GDP ratios in the LAC region, 2021 15
Figure 3.1. Personal tax income threshold relative to the average wage in Latin America 32
Boxes
Box 2.1. Literature on the possible causes of labour informality in Latin America 18
Box 2.2. The design of social protection systems in Latin America 19
Box 2.3. Funded defined-contribution pension systems in selected OECD countries 23
Box 2.4. The pros and cons of a Universal Basic Income 27
Box 2.5. Improving social registries 28