Brazilian PAYG system has been under financial stress and needs to be reformed. I use a computational general equilibrium model, with 55 overlapping generations to simulate macroeconomic and welfare impacts of alternative social security reforms. Short run effects of reform will vary widely depending on which tax base is chosen to finance remaining retirement benefits. Under a variety of possible transitional schemes, there is no tax path that is strictly preferred by every generation.

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We study the transitional path and the welfare effects generated by social security reform in Brazil. By means of an overlapping-generations model with a fixed production factor, we simulate the transition path to a fully funded system. There are two benchmark cases: the benefits from the unfunded system being cut off and being maintained to the generations that contribute to this system. We compare the welfare variations on each transition scheme through the social discount rate.

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In this paper we argue that previous studies that have found economies of scale were based on cost curves that were empirically misspecified. We estimate a semi parametric cost curve which allows us to conclude that if there exist economies of scale, minimum efficient scales are very low, equivalent to three percent of the market share. Our results are consistent with the recent experience in Mexico in which small PFM are entering the market.

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I estimate the impact of social security benefits on retirement decisions of rural workers by studying changes in the rules governing old-age benefits for rural workers in Brazil. I focus on a reform implemented in 1991, which reduced the minimum eligibility age, increased benefits, and extended the program to non-heads of households. The main finding of the paper is that receiving old-age benefits increases the probability of not working by about forty percentage points.

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Chileans with more knowledge about their pension system more actively contribute to and manage their personal accounts. This positive association remains even after controlling for other attributes, such as financial planning horizons and risk preferences. Members with the most discretion with their accounts, the self-employed, are often the least knowledgeable. This micro-level analysis of retirement saving suggests that members require more pension knowledge to fully utilize their choices.

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We evaluate the impact of individual capitalization pension systems on the distribution of income at retirement for the Chilean case. We compare a forecasted distribution of the retirement income to the corresponding active life income distribution for each cohort. This comparison shows that in general the distribution of retirement income is much more unequal than the distribution of active life income for the same cohort.

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