The Impacts of Social Security Changes on Rural Workers Labor Supply: A Regression Discontinuity Approach

Bernardo L. Queiroz, Universidade Federal de Minas Gerais

The effects of public transfer systems on the labor supply are widely studied. There is a large literature on how social security systems around the world, both in developed and developing countries create incentives to early retirement (Gruber & Wise, 1999; Wise, 2004; Burtless & Quinn, 2001; Queiroz, 2005). Research on the impacts of other welfare programs in the United States and Europe are also common, and such studies also investigate negative impacts of the programs on the labor supply of the recipients. In recent years, negative effects on the labor supply of individuals justified policy changes on a series of welfare programs. The main objective of the paper is to study the impacts of the 1988 social security reform for rural workers on their labor supply decision. We investigate the period near the reform, around 1988, and again a few years later to check which impact the legislation change had.