The effects of longevity and distortions on education and retirement

This article studies the impact of longevity and taxation on life-cycle decisions and long-run income. Individuals allocate optimally their total lifetime between education, working and retirement. They also decide at each moment how much to save or consume out of their income, and after entering the labor market how to divide their time between labor and leisure. The model incorporates experience-earnings profiles and the return-to-education function that follows evidence from the labor literature. In this setup, increases in longevity raises the investment in education - time in school - and retirement. The model is calibrated to the U.S. and is able to reproduce observed schooling levels and the increase in retirement, as the evidence shows. Simulations show that a country equal to the U.S. but with 20% smaller longevity will be 25% poorer. In this economy, labor taxes have a strong impact on the per capita income, as it decreases labor effort, time at school and retirement age, in addition to the general equilibrium impact on physical capital. We conclude that life-cycle effects are relevant in analyzing the aggregate outcome of taxation.

Barriers to entry in monopoly markets: automobile distribution in Brazil

O Objetivo deste Trabalho é Analisar os Efeitos da Entrada de uma Segunda Concessionária de Automóveis em Mercados Previamente Monopolizados. para Tanto, Construiu-Se um Banco de Dados com a Localização de Concessionárias de Automóveis em Microrregiões e Características Demográficas e Econômicas Destas Microrregiões. a Partir Desse Banco de Dados e de Modelos de Escolha Binária, Foram Identificadas Variáveis que Condicionam a Existência e o Número de Concessionárias em Microrregiões. Utilizando-Se de um Modelo Adaptado de Bresnahan e Reiss (1990), Foram Estimados os Custos Fixos de Entrada de Concessionárias em Mercados Monopolizados. os Resultados Obtidos Sugerem que as Barreiras À Entrada não são Significativas, o que Aumenta a Probabilidade de que a Cláusula de Exclusividade nos Contratos de Concessão não Cause Danos À Concorrência no Mercado Brasileiro de Distribuição de Automóveis

The effect of social security, demography and technology on retirement

This article investigates the causes in the reduction of labor force participation of the old. We argue that the changes in social security policy, in technology and in demography may account for most of the changes in retirement over the second part of the last century in the U.S. economy. We develop a dynamic general equilibrium model with endogenous retirement that embeds social security legislation. The model is able to match very closely the increase in the retirement rate of males aged 65 and older. It also quanti es the isolated impact on retirement and on the solvency of the social security system of the di¤erent factors. The model suggests that technological and demographic changes had a strong in uence on retirement, so that it would have increased signi cantly even if the social security rules had not changed. However, as the latter became much more generous in the past, changes in social security policy can account not only for a sizeable part of the expansion of retirement, but also for the most of the observed increase in the social security expenses as a share of GDP.

Barriers faced by the Brazilian business community to access the United States market system

Trade history between Brazil and the United States is long and complicated but it is only in recent years that the trade balance has become more equal in terms of both imports and exports. As Brazil continues to establish its position in the world economy and expand its export market it is only natural that it seeks to increase exports to its single largest trading partner, the United States, and maintain the market share already established. In order to achieve success in these regards Brazil must have a deep understanding of the American political economy system. Part of this entails understanding barriers that must be overcome by Brazilian businesses to access United States markets, particularly the access of certain products at the industry level.

The effect of social security, demography and technology on retirement

This article investigates the causes in the reduction of labor force participation of the old. We argue that the changes in social security policy, in technology and in demography may account for most of the changes in retirement over the second part of the last century in the U.S. economy. We develop a dynamic general equilibrium model with endogenous retirement that embeds social security legislation. The model is able to match very closely the increase in the retirement rate of males aged 65 and older. It also quanti es the isolated impact on retirement and on the solvency of the social security system of the di¤erent factors. The model suggests that technological and demographic changes had a strong in uence on retirement, so that it would have increased signi cantly even if the social security rules had not changed. However, as the latter became much more generous in the past, changes in social security policy can account not only for a sizeable part of the expansion of retirement, but also for the most of the observed increase in the social security expenses as a share of GDP.

On the long run effects of barriers to trade

We study the macroeconomic effects of international trade policy by integrating a Hecksher-Ohlin trade model into an optimal-growth framework. The model predicts that a more open economy will have higher factor productivity. Furthermore, there is a "selective development trap," an additional steady state with low income, to which countries may or may not converge, depending on policy. Income at the development trap falls as trade barriers increase. Hence, cross-country differences in barriers to trade may help explain the dispersion of per-capita income observed across countries. The effects are quantified and we show that protectionism can explain a relevant fraction of TFP and long-run income differentials across countries.

Trade barriers and productivity growth: cross-industry evidence

This article investigates the impact of trade protection on the evolution of labor productivity and total factor productivity (TFP) of the Brazilian manufacturing sector. An annual panel-dataset of 16 industries for the years 1985 through 1997, a period that includes a major trade liberalization, was used. The regressions reported here are robust to openness indicator (nominal tari®s and e®ective protection rate were used), control variables and time period and suggest that barriers to trade negatively a®ects productivity growth at industry level: those sectors with lower barriers experienced higher growth. We were also able to link the observed increase of industry productivity growth after 1991 to the widespread reduction on exective protection experienced in the country in the nineties.

On the growth effects of barriers to trade

We study the macroeconomic effects of international trade policy by integrating a Hecksher-Ohlin trade model into an optimal-growth framework. The model predicts that an open economy will have higher factor productivity and faster growth. Also, under protectionist policies there may be “development traps,” or additional steady states with low income. In the last case, higher tariffs imply lower incomes, so that the large cross-country differences in barriers to trade may explain part of the huge dispersion of per capita income observed across countries. The model simulation shows that the link between trade and macroeconomic performance may be quantitatively important.

Essays on the general equilibrium effects of barriers to trade on economic growth, foreign trade and the location of economic activity in Brazil

This work presents a fully operational interstate CGE model implemented for the Brazilian economy that tries to quantify both the role of barriers to trade on economic growth and foreign trade performance and how the distribution of the economic activity may change as the country opens up to foreign trade. Among the distinctive features embedded in the model, modeling of external scale economies, port efficiency and land-maritime transport costs provides an innovative way of dealing explicitly with theoretical issues related to integrated regional systems. In order to illustrate the role played by the quality of infrastructure and geography on the country‟s foreign and interregional trade performance, a set of simulations is presented where barriers to trade are significantly reduced. The relative importance of trade policy, port efficiency and land-maritime transport costs for the country trade relations and regional growth is then detailed and quantified, considering both short run as well as long run scenarios. A final set of simulations shed some light on the effects of liberal trade policies on regional inequality, where the manufacturing sector in the state of São Paulo, taken as the core of industrial activity in the country, is subjected to different levels of external economies of scale. Short-run core-periphery effects are then traced out suggesting the prevalence of agglomeration forces over diversion forces could rather exacerbate regional inequality as import barriers are removed up to a certain level. Further removals can reverse this balance in favor of diversion forces, implying de-concentration of economic activity. In the long run, factor mobility allows a better characterization of the balance between agglomeration and diversion forces among regions. Regional dispersion effects are then clearly traced-out, suggesting horizontal liberal trade policies to benefit both the poorest regions in the country as well as the state of São Paulo. This long run dispersion pattern, on one hand seems to unravel the fragility of simple theoretical results from recent New Economic Geography models, once they get confronted with more complex spatially heterogeneous (real) systems. On the other hand, it seems to capture the literature‟s main insight: the possible role of horizontal liberal trade policies as diversion forces leading to a more homogeneous pattern of interregional economic growth.

The effect of social security, health, demography and technology on retirement

This article studies the determinants of the labor force participation of the elderly and investigates the factors that may account for the increase in retirement in the second half of the last century. We develop a life-cycle general equilibrium model with endogenous retirement that embeds Social Security legislation and Medicare. Individuals are ex ante heterogeneous with respect to their preferences for leisure and face uncertainty about labor productivity, health status and out-of-pocket medical expenses. The model is calibrated to the U.S. economy in 2000 and is able to reproduce very closely the retirement behavior of the American population. It reproduces the peaks in the distribution of Social Security applications at ages 62 and 65 and the observed facts that low earners and unhealthy individuals retire earlier. It also matches very closely the increase in retirement from 1950 to 2000. Changes in Social Security policy - which became much more generous - and the introduction of Medicare account for most of the expansion of retirement. In contrast, the isolated impact of the increase in longevity was a delaying of retirement.

Barriers to trade: barriers to growth

We study the cxtent to which differences in international trade policies contribute to the significant cross-country disparities in macroeconomic performance. In particular, wc concentrate on the effect of protectionism on generating differences in leveIs (of income and of measured total factor productivity), in growth rates (of output, productivity and inputs), in volatility and in trends (or development traps). We document that these rclationships are strong in cross country data, integrate a Hecksher-Ohlin mode! of international trade into the standard macroeconomic modcl to derive those rclationships analytically, and to quantify them. Our results suggest that a large fraction of the cros::; country variations can be attributed to trade policy.

Old-age benefits and retirement decisions of rural elderly in Brazil

I estimate the impact of social security benefits on retirement decisions of rural workers by studying changes in the roles governing social security in Brazil. I focus on a 1991 reform, which brought a reduction in the minimum eligibility age for males and females, a doubling of benefit values and the extension of benefits to non-heads of households. Because beneficiaries are not subject to means or retirement tests, I estimate apure income effect. I find that a reduction in the minimum eligibility age for old-age benefits was an important determinant in the reduction in labor supply of elderly rural workers in Brazil. Finally, I find that benefit take-up rates are larger among the better educated, but least-schooled workers show the largest labor supply responses to the reform.

Barriers to entry and development

This paper analyzes the effect of an accountability system in the Brazilian college market. For each discipline, colleges were assigned a grade that depended on the scores of their students on the ENC, an annual mandatory exam. Those grades were then disclosed to the public, giving applicants information about college quality. The system also established rewards and penalties based on the colleges’ grades. I find that the ENC had a substantial effect on different measures of college quality, such as faculty education and the proportion of full-time faculty. The detailed information from this unique dataset and the fact that the ENC started being required for different disciplines in different years allow me to control for time-specific effects, thus minimizing the bias caused by policy endogeneity. Indeed, I find strong evidence on the importance of controlling for time-specific effects: estimates of the impact of the ENC on college quality more than double when I do not take those effects into account. The ENC also affects positively the ratio between applicants and vacancies, and it decreases the faculty and the entering class sizes. The results suggest that its introduction fostered competition and favored colleges entering the market.

The impact of social security reform on occupational and retirement behavior : a quantitative assessment for Brazil

Population ageing is a problem that countries will have to cope with within a few years. How would changes in the social security system affect individual behaviour? We develop a multi-sectoral life-cycle model with both retirement and occupational choices to evaluate what are the macroeconomic impacts of social security reforms. We calibrate the model to match 2011 Brazilian economy and perform a counterfactual exercise of the long-run impacts of a recently adopted reform. In 2013, the Brazilian government approximated the two segregated social security schemes, imposing a ceiling on public pensions. In the benchmark equilibrium, our modelling economy is able to reproduce the early retirement claiming, the agents' stationary distribution among sectors, as well as the social security deficit and the public job application decision. In the counterfactual exercise, we find a significant reduction of 55\% in the social security deficit, an increase of 1.94\% in capital-to-output ratio, with both output and capital growing, a delay in retirement claims of public workers and a modification in the structure of agents applying to the public sector job.