Ex-ante methods to assess the impact of social insurance policies on labor supply with an application to Brazil

This paper solves and estimates a stochastic model of optimal inter-temporal behavior to assess how changes in the design of the unemployment benefits and pension systems in Brazil could affect savings rates, the share of time that individuals spend outside of the formal sector, and retirement decisions. Dynamics depend on five main parameters: preferences regarding consumption and leisure, preferences regarding formal versus informal work, attitudes towards risks, the rate of time preference, and the distribution of an exogenous shock that affects movements in and out of the social insurance system (given individual decisions). The yearly household survey is used to create a pseudo panel by age-cohorts and estimate the joint distribution of model parameters based on a generalized version of the Gibbs sampler. The model does a good job in replicating the distribution of the members of a given cohort across states (in or out of the social insurance / active or retired). Because the parameters are related to individual preferences or exogenous shocks, the joint distribution is unlikely to change when the social insurance system changes. Thus, the model is used to explore how alternative policy interventions could affect behaviors and through this channel, benefit levels and fiscal costs. The results from various simulations provide three main insights: (i) the Brazilian social insurance system today might generate unnecessary distortions (lower savings rates and less formal employment) that increase the costs of the system and can induce regressive redistribution; (ii) there are important interactions between the unemployment benefits and pension systems, which calls for joint policy analysis when considering reforms; and (iii) current distortions could be reduced by creating an actuarial link between contributions and benefits and then combining matching contributions and anti-poverty targeted transfers to cover individuals with limited or no savings capacity.Pensions&Retirement Systems,Emerging Markets,Labor Policies,Labor Markets,Debt Markets

Incentive Effects of Risk Pooling, Redistributive and Savings Arrangements in Unemployment Benefit Systems: Evidence from a Job-Search Model for Brazil

We develop a model of job search and use it to assess the effects that the Brazilian unemployment benefit system has on exit rates from unemployment. In our setup, unemployed workers receive job offers from the formal and informal sectors and decide whether to accept them or wait. Only jobs in the formal sector come with unemployment benefits. After incorporating the rules of the Brazilian unemployment benefit system we estimate the parameters of the model using its labor force survey (a rotating panel). Key parameters determining model dynamics are: the distribution of wage offers for each individual; the observed probabilities of separation from formal and informal jobs; and the unobserved job offers arrival rates. The results show that, in general, workers eligible for unemployment benefits also have higher offer rates – their unobserved characteristic are correlated with more job opportunities. Policy simulations ten suggest that the risk pooling and savings component of the unemployment benefit system have small effects on the probabilities of remaining unemployed. The main effect of both schemes is to reduce transitions into informal jobs. The effects are larger for unskilled workers, particularly women. The simulations also show that current effects are conditioned on the design of the system. More generous unemployment benefits, for instance, could substantially increase the share of workers who remain unemployed. In addition, asking workers to contribute to finance unemployment benefits would reduce formal employment.labor market transitions, unemployment insurance, social protection, job-search models, structural estimations

Diferencial de salários da mão de obra terceirizada no Brasil

Este artigo compara os salários da mão de obra terceirizada no Brasil com os dos trabalhadores contratados diretamente pelas empresas. A comparação simples entre as remunerações médias dos dois grupos indica que os salários dos terceirizados são 17% inferiores, mas quando o diferencial é controlado pelo efeito fixo do trabalhador, a diferença cai para 3,6%. Além disso, as evidências apontam para uma grande heterogeneidade no diferencial salarial. Trabalhadores de ocupações como telemarketing têm o salário médio 8% inferior quando estão terceirizados. Por outro lado, ocupações como segurança e vigilância oferecem salários estatisticamente maiores, em média, para os terceirizados. As evidências indicam ainda que o diferencial desfavorável ao terceirizado apresentou um aumento entre 2007 e 2012 e uma redução a partir de então.This paper estimates the wage differentials between outsourced and in-house workers in Brazil.The simple comparison of average wages of the two groups indicates that outsourced workers earn 17% less, but after controlling by workers fixed effects, the difference drops to 3.6%. In addition, we show that there is great heterogeneity in the wage differential. Telemarketing workers earn 8% less when outsourced. On the other hand, occupations such as security andsurveillance offer statistically higher wages, on average, to outsourced workers. The evidence also indicates that the unfavorable differential to the outsourced showed an increase between 2007 and 2012 and a decrease after then

FISCAL IMPACTS OF SOCIAL SECURITY REFORM IN BRAZIL

This article focuses on the reform of Social Security in Brazil, initiated in 2003. We estimate the fiscal impact of the original government proposal, as well as of the proposal approved at the House of Representatives, and the final format approved at the Senate. We also estimated both, the balancing contribution rate and the effective contribution rate, in the three phases of the reforming process. Results indicate that although the final impact was considerably reduced from the initial project, a great deal of progress has been made towards both, the reduction of annual Social Security deficit and its transformation into a more equitable system.

Mudanças na Previdência Social: Uma Avaliação dos Efeitos de Reformas Paramétricas no RGPS

Neste artigo são quantificados os impactos de algumas reformas paramétricas no Regime Geral de Previdência Social (RGPS). Nas reformas estudadas foram modificados o tempo de contribuição necessário, a idade de aposentadoria e a duração da transição para o novo regime. Também foram estimados efeitos de mudanças no valor do salário mínimo. Foram feitas diversas combinações das alterações nessas variáveis, de forma que é possível analisar seu efeito separado e conjunto. Os resultados mostram que elevações no salário mínimo têm forte impacto sobre as despesas da previdência. Os dados também mostram que prolongar o período de transição não reduz de maneira significativa os impactos da reforma. Esta pode ser uma estratégia do governo para vencer resistências e aprovar medidas de mudança.Previdência Social, Reforma Previdenciária, Reforma Paramétrica, Brasil