Three essays on social insurance in Brazil

Social insurance in Brazil is in a serious financial crisis. Outlays exceed payroll contributions, and since there is no simple mechanism to curtail expenditures, the government has relied on tax increases or on the introduction of new taxes to finance the system. Some proposals for reform advocate a radical change towards a private system. This dissertation investigates three aspects of social insurance in Brazil: the impact of social insurance and other components of fiscal policy on generational accounts, the effect of privatization reforms on generational accounts, and the macroeconomic impact of privatization.; The first chapter describes the main characteristics and distortions of social insurance in Brazil and how its financing crisis has jeopardized other social programs.; The second chapter uses the Generational Accounting methodology, developed by Auerbach, Kotlikoff and Gokhale, to address how current and alternative fiscal policies can affect the distribution of resources between living and future generations. The general conclusion is that the actual path of fiscal policies, coupled with a demographic transition, imposes a high burden on future generations of Brazilians.; The objective of the third chapter is twofold. First, it offers a framework for reforming social insurance in Brazil, from a pay-as-you-go system to a fully financed one. Second, it estimates the impact of alternative privatization reforms on generational accounting. The proposal was carefully designed to attend the characteristics of the Brazilian systems and to minimize losses to current beneficiaries. Results show that privatization substantially reduces the fiscal burden placed on future generations.; The fourth chapter uses the Auerbach-Kotlikoff Dynamic Life-Cycle Model to simulate the macroeconomic impact of privatization of social insurance in Brazil. The original model was adjusted to incorporate some of the characteristics of the Brazilian system of social insurance. The conclusion is that privatization can engender substantial capital deepening, and considerable increase in income and wage levels.