Social Security Reform and Personal Saving: Evidence from Brazil

  •  Pedro Tonon Zuanazzi    
  •  Adelar Fochezatto    
  •  Marcos Vinicio Wink Junior    


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.

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