Contributory Social Security in Paraguay: A Political Economy Perspective

Understanding the current situation of Paraguayan contributory social security—particularly, its low coverage, institutional fragmentation, and socioeconomic segmentation—requires considering the role of economic elites in policy implementation. Given the potential effect and influence social protection can have on people’s security, economic autonomy, and income redistribution, this social protection policy poses a risk to sectors in power. A rentier economic elite who benefits from the weakness of public institutions and social vulnerability has little incentive to incorporate this policy into its agenda and contribute to the strengthening of the pension system. This paper seeks to address some elements that help explain the weakness of the contributory system in terms of the influence exercised by the Paraguayan economic elite.