Social security reform and its medium and long-term macroeconomic impacts: an overlapping generation model approach for brazilian case

This paper presents an economic simulation assessing the medium and long-term impacts of the social security reform outlined in Constitutional Amendment (EC) No. 103/2019. To conduct this analysis, we employed an overlapping generations (OLG) model spanning 57 generations, which incorporates the transitional provisions. The results indicate that while EC No. 103/2019 may not offer a definitive solution to Brazil’s pension challenges, it does provide a temporary respite. Specifically, it offers a window of approximately 10 to 15 years during which the social security deficit stabilizes. However, it’s crucial to acknowledge that beyond this period, the situation is expected to deteriorate once more, with social security returning to an unsustainable trajectory. As a policy suggestion, it will be important to have another pension reform in the near future.