Social Security Reform and Personal Saving: Evidence from Brazil

Abstract

The population aging process has caused a financial imbalance in the social security systems of countries based on pay as you go system, as is the case in Brazil. To face this challenge, the Brazilian governments have undertaken several reforms since the 1988 Constitution. Confronting the life cycle hypothesis, the aim of this paper is to estimate the causal effects of Social Security Reforms on the Likelihood of Saving in Brazil by exploring two exogenous events, the 41th (of 2003) and 47th (of 2005) Constitutional Amendments, that reduced the expectations of benefits only for public servants. Using data from the House Budget Surveys, the results of differences-in-differences models show that the reform increased in a range of 2.1 to 2.9 percentage points in the probability of saving of the treated group. The results are in line with the recent literature indicating that reforms contribute to an increase in personal savings.

Temporal trend and magnitude of previdenciary benefits for workplace accidents in Brazil

“…These numbers reflect the importance of workplace accident benefits in the broader context of resources allocated to RGPS benefits, demonstrating the economic burden of workplace accidents for the country. This proportion is relevant because it contributes to assessing the sustainability of the social security system, especially in the context of population aging and demographic changes 32 , 33 . The distributive objectives of RGPS need to be pursued without disregarding the sustainability of this policy.…”

The Impact of Pensions and Private Transfers on Rural Poverty in Brazil

“…Since mid-2006, the rural worker is also supposed to contribute 2.1 % on the total gross agricultural revenue, waived for those producing for self-consumption (Stivali, 2017). In Brazil, the rural pension system is the most comprehensive among the developing countries in regard to its coverage and the targeting of the poor (Afonso & Fernandes, 2005;Mesa-Lago, 1994;Zuanazzi, Fochezatto, & Júnior 2018). These features are not intentional as entitlement requirements are not exclusively based on income (Schwarzer, 2000;Valadares & Galiza, 2016).…”

“…Furthermore, the rural retirement system has been seen as instrumental in the reduction of both social unrest and opposition to the restructuring of the agricultural sector during the import substitution industrialization model in Brazil, as well as a mitigation mechanism for rural-urban migration (Oliveira & Aquino, 2017). This institutional and political environment, fueled by the universalization principles brought about by the 1988 Brazilian Constitution, set the basis for the expansion of benefits to all rural households (Zuanazzi et al, 2018).…”

“…Thus, contemporary analysis of the impact of transfers on the rural Brazil is an important empirical question not fully addressed. This becomes even more relevant in times where the increasing demographic pressure on the social security system threatens its ability to maintain itself in the absence of a profound reform, despite its form, extension, and inclusion/ exclusion criteria (Zuanazzi et al, 2018).…”