IDEAS home Printed from https://ideas.repec.org/a/eee/joecag/v18y2021ics2212828x20300694.html
   My bibliography  Save this article

The evolution of labor force participation and the expected length of retirement in Brazil

Author

Listed:
  • Lanza Queiroz, Bernardo
  • Lobo Alves Ferreira, Matheus

Abstract

Population aging and recent trends in labor force participation rates are creating a considerable impact on public pension programs around the world. Brazil combines a sizeable public pension program, rapid population aging and a decline in the labor force of the elderly, imposing additional costs to the sustainability of the pension programs. In this paper, we investigate the length of retirement in Brazil and analyze the evolution of labor force participation rates and retirement from the late '70 s and forecast future trends labor force participation and duration of retirement. We use the Lee-Carter model to forecast labor force participation rates and combine those estimates to United Nations mortality forecasts to estimate the expected length of retirement to 2035. We find a steady decline in the labor force participation of young and older adults over time, mostly due to access to education and public pension programs. In contrast, for females, we observed a constant increase in the participation for the women in reproductive ages. Our forecasts indicate that older adults' labor force will decline in the future to levels compared to more developed economies. They also suggest that the expected length of retirement might increase from 12.5% to about 20%, from 1993 to 2035, of males adult working lives and from 11.47% to 27.41% for females. These trends, associated with population aging and longer life expectancy, reduce the ratio between workers and retirees, affecting the basic premise of the pay-as-you-go (PAYGO) system. The proposed model to forecast labor force rates works well in Brazil's case and provides essential insights into the future of the system. Analysis of pension sustainability should consider population aging as well as trends in labor force rates.

Suggested Citation

  • Lanza Queiroz, Bernardo & Lobo Alves Ferreira, Matheus, 2021. "The evolution of labor force participation and the expected length of retirement in Brazil," The Journal of the Economics of Ageing, Elsevier, vol. 18(C).
    • Handle: RePEc:eee:joecag:v:18:y:2021:i:c:s2212828x20300694
    DOI: 10.1016/j.jeoa.2020.100304
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2212828X20300694
    Download Restriction: no
    File URL: https://libkey.io/10.1016/j.jeoa.2020.100304?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Luc Behaghel & David M. Blau, 2012. "Framing Social Security Reform: Behavioral Responses to Changes in the Full Retirement Age," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 41-67, November.
    2. David E. Bloom & David Canning, 2004. "Global demographic change : dimensions and economic significance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 9-56.
    3. Rodrigo R. Soares, 2007. "On the Determinants of Mortality Reductions in the Developing World," Population and Development Review, The Population Council, Inc., vol. 33(2), pages 247-287, June.
    4. Rocha, Rudi & Ulyssea, Gabriel & Rachter, Laísa, 2018. "Do lower taxes reduce informality? Evidence from Brazil," Journal of Development Economics, Elsevier, vol. 134(C), pages 28-49.
    5. Leticia Marteleto, 2010. "Family size, adolescents’ schooling and the Demographic Transition: Evidence from Brazil," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 23(15), pages 421-444.
    6. David Cutler & Angus Deaton & Adriana Lleras-Muney, 2006. "The Determinants of Mortality," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 97-120, Summer.
    7. David E. Bloom & Roddy McKinnon, 2010. "Introduction: Social security and the challenge of demographic change," PGDA Working Papers 6110, Program on the Global Demography of Aging.
    8. Costa, Dora L., 1998. "The Evolution of Retirement," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226116082, December.
    9. Jonathan Gruber & David Wise, 2005. "Social Security Programs and Retirement around the World: Fiscal Implications, Introduction and Summary," NBER Working Papers 11290, National Bureau of Economic Research, Inc.
    10. Courtney C. Coile, 2018. "The Evolution of Retirement Incentives in the US," NBER Chapters, in: Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, pages 435-459, National Bureau of Economic Research, Inc.
    11. David E. Bloom & Roddy McKinnon, 2010. "Social security and the challenge of demographic change," International Social Security Review, John Wiley & Sons, vol. 63(3‐4), pages 3-21, July.
    12. Booth, H. & Tickle, L., 2008. "Mortality Modelling and Forecasting: a Review of Methods," Annals of Actuarial Science, Cambridge University Press, vol. 3(1-2), pages 3-43, September.
    13. Alexandre Gori Maia & Camila Strobl Sakamoto, 2016. "The impacts of rapid demographic transition on family structure and income inequality in Brazil, 1981–2011," Population Studies, Taylor & Francis Journals, vol. 70(3), pages 293-309, September.
    14. Elke Loichinger, 2015. "Labor force projections up to 2053 for 26 EU countries, by age, sex, and highest level of educational attainment," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 32(15), pages 443-486.
    15. Elke Loichinger & Alexia Prskawetz, 2017. "Changes in economic activity: The role of age and education," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 36(40), pages 1185-1208.
    16. De Souza, Laeticia R. & Queiroz, Bernardo L. & Skirbekk, Vegard F., 2019. "Trends in health and retirement in Latin America: Are older workers healthy enough to extend their working lives?," The Journal of the Economics of Ageing, Elsevier, vol. 13(C), pages 72-83.
    17. Marcelo Abi-Ramia Caetano & Leonardo Alves Rangel & Eduardo da Silva Pereira & Graziela Ansiliero & Henrique Paiva, 2016. "O Fim do Fator Previdenciário e a Introdução da Idade Mínima: questões para a previdência social no Brasil," Discussion Papers 2230, Instituto de Pesquisa Econômica Aplicada - IPEA.
    18. Carter, Lawrence R. & Lee, Ronald D., 1992. "Modeling and forecasting US sex differentials in mortality," International Journal of Forecasting, Elsevier, vol. 8(3), pages 393-411, November.
    19. Roberto de Rezende Rocha & Marcelo Abi-Ramia Caetano, 2008. "O sistema Previdenciário Brasileiro: Uma Avaliação de Desempenho Comparada," Discussion Papers 1331, Instituto de Pesquisa Econômica Aplicada - IPEA.
    20. Dudel, Christian & López Gómez, María Andrée & Benavides, Fernando G. & Myrskylä, Mikko, 2018. "The length of working life in Spain: levels, recent trends, and the impact of the financial crisis," LSE Research Online Documents on Economics 86990, London School of Economics and Political Science, LSE Library.
    21. John Bongaarts, 2004. "Population Aging and the Rising Cost of Public Pensions," Population and Development Review, The Population Council, Inc., vol. 30(1), pages 1-23, March.
    22. Christian Dudel & María Andrée López Gómez & Fernando G. Benavides & Mikko Myrskylä, 2018. "The Length of Working Life in Spain: Levels, Recent Trends, and the Impact of the Financial Crisis," European Journal of Population, Springer;European Association for Population Studies, vol. 34(5), pages 769-791, December.
    23. Johann Fuchs & Doris Söhnlein & Brigitte Weber & Enzo Weber, 2018. "Stochastic Forecasting of Labor Supply and Population: An Integrated Model," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 37(1), pages 33-58, February.
    24. Ronald Lee & Timothy Miller, 2001. "Evaluating the performance of the lee-carter method for forecasting mortality," Demography, Springer;Population Association of America (PAA), vol. 38(4), pages 537-549, November.
    25. Besamusca, Janna & Tijdens, Kea & Keune, Maarten & Steinmetz, Stephanie, 2015. "Working Women Worldwide. Age Effects in Female Labor Force Participation in 117 Countries," World Development, Elsevier, vol. 74(C), pages 123-141.
    26. Christian Dudel & Mikko Myrskylä, 2017. "Working Life Expectancy at Age 50 in the United States and the Impact of the Great Recession," Demography, Springer;Population Association of America (PAA), vol. 54(6), pages 2101-2123, December.
    27. Jonathan Gruber & David Wise, 2001. "An International Perspective on Policies for an Aging Society," NBER Working Papers 8103, National Bureau of Economic Research, Inc.
    28. Mr. Alfredo Cuevas & Ms. Izabela Karpowicz & Mr. Carlos Mulas-Granados & Mauricio Soto, 2017. "Fiscal Challenges of Population Aging in Brazil," IMF Working Papers 2017/099, International Monetary Fund.
    29. Baerlocher, Diogo & Parente, Stephen L. & Rios-Neto, Eduardo, 2019. "Economic effects of demographic dividend in Brazilian regions," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    30. Jesús-Adrián Alvarez & José Manuel Aburto & Vladimir Canudas-Romo, 2020. "Latin American convergence and divergence towards the mortality profiles of developed countries," Population Studies, Taylor & Francis Journals, vol. 74(1), pages 75-92, January.
    31. Ronald Lee, 2000. "The Lee-Carter Method for Forecasting Mortality, with Various Extensions and Applications," North American Actuarial Journal, Taylor & Francis Journals, vol. 4(1), pages 80-91.
    32. Yen-hsin Alice Cheng & Elke Loichinger, 2017. "The Future Labor Force of an Aging Taiwan: The Importance of Education and Female Labor Supply," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 36(3), pages 441-466, June.
    33. Warren C. Sanderson & Sergei Scherbov, 2013. "The Characteristics Approach to the Measurement of Population Aging," Population and Development Review, The Population Council, Inc., vol. 39(4), pages 673-685, December.
    34. Sher Verick, 2018. "Female labor force participation and development," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-87, December.
    35. Costa, Dora L, 1998. "The Evolution of Retirement: Summary of a Research Project," American Economic Review, American Economic Association, vol. 88(2), pages 232-236, May.
    36. Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 457-566, Elsevier.
    37. Hammer, Bernhard & Prskawetz, Alexia & Freund, Inga, 2015. "Production activities and economic dependency by age and gender in Europe: A cross-country comparison," The Journal of the Economics of Ageing, Elsevier, vol. 5(C), pages 86-97.
    38. Chulhee Lee, 2001. "The expected length of male retirement in the United States, 1850-1990," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(4), pages 641-650.
    39. Courtney C. Coile, 2015. "Economic Determinants Of Workers’ Retirement Decisions," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 830-853, September.
    40. Cassio M. Turra & Bernardo L Queiroz & Eduardo L. G. Rios-Neto, 2011. "Idiosyncrasies of intergenerational transfers in Brazil," Chapters, in: Ronald Lee & Andrew Mason (ed.), Population Aging and the Generational Economy, chapter 21, Edward Elgar Publishing.
    41. Stuart Gietel-Basten & Silvia E Giorguli Saucedo & Sergei Scherbov, 2020. "Prospective measures of aging for Central and South America," PLOS ONE, Public Library of Science, vol. 15(7), pages 1-14, July.
    42. Dora L. Costa, 1998. "The Evolution of Retirement: An American Economic History, 1880-1990," NBER Books, National Bureau of Economic Research, Inc, number cost98-1, March.
    43. Pierre-Carl Michaud & Susann Rohwedder, 2008. "Forecasting Labor Force Participation and Economic Resources of the Early Baby Boomers," Working Papers wp175, University of Michigan, Michigan Retirement Research Center.
    44. Axel Börsch-Supan & Courtney Coile, 2019. "Introduction to "Social Security Programs and Retirement around the World: Reforms and Retirement Incentives"," NBER Chapters, in: Social Security Programs and Retirement around the World: Reforms and Retirement Incentives, pages 1-42, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Queiroz, Bernardo L & Ferreira, Matheus L.A., 2018. "The Evolution of the Elderly Labor Force Participation and Retirement in Brazil," OSF Preprints db54h, Center for Open Science.
    2. Queiroz, Bernardo L. & Souza, Laeticia R., 2017. "Retirement incentives and couple’s retirement decisions in Brazil," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 1-13.
    3. Sánchez-Romero, Miguel & d׳Albis, Hippolyte & Prskawetz, Alexia, 2016. "Education, lifetime labor supply, and longevity improvements," Journal of Economic Dynamics and Control, Elsevier, vol. 73(C), pages 118-141.
    4. Lydia Dutton & Athanasios A. Pantelous & Malgorzata Seklecka, 2020. "The impact of economic growth in mortality modelling for selected OECD countries," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 39(3), pages 533-550, April.
    5. Ahbab Mohammad Fazle Rabbi & Stefano Mazzuco, 2021. "Mortality Forecasting with the Lee–Carter Method: Adjusting for Smoothing and Lifespan Disparity," European Journal of Population, Springer;European Association for Population Studies, vol. 37(1), pages 97-120, March.
    6. Nicholas Crafts, 2022. "The 15‐Hour Week: Keynes's Prediction Revisited," Economica, London School of Economics and Political Science, vol. 89(356), pages 815-829, October.
    7. Laurent Callot & Niels Haldrup & Malene Kallestrup-Lamb, 2016. "Deterministic and stochastic trends in the Lee–Carter mortality model," Applied Economics Letters, Taylor & Francis Journals, vol. 23(7), pages 486-493, May.
    8. Moshe Hazan, 2006. "Longevity and Hours over the Lifetime: Data and Implications," 2006 Meeting Papers 416, Society for Economic Dynamics.
    9. Sebnem Kalemli-Ozcan & David Weil, 2010. "Mortality change, the uncertainty effect, and retirement," Journal of Economic Growth, Springer, vol. 15(1), pages 65-91, March.
    10. Ralph Stevens, 2017. "Managing Longevity Risk by Implementing Sustainable Full Retirement Age Policies," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 84(4), pages 1203-1230, December.
    11. Péter Vékás, 2020. "Rotation of the age pattern of mortality improvements in the European Union," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(3), pages 1031-1048, September.
    12. Alexia Prskawetz & Bernhard Hammer, 2018. "Does education matter? – economic dependency ratios by education," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 16(1), pages 111-134.
    13. Blundell, R. & French, E. & Tetlow, G., 2016. "Retirement Incentives and Labor Supply," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 457-566, Elsevier.
    14. Rob Hyndman & Heather Booth & Farah Yasmeen, 2013. "Coherent Mortality Forecasting: The Product-Ratio Method With Functional Time Series Models," Demography, Springer;Population Association of America (PAA), vol. 50(1), pages 261-283, February.
    15. Giesecke, Matthias & Jäger, Philipp, 2021. "Pension incentives and labor supply: Evidence from the introduction of universal old-age assistance in the UK," Journal of Public Economics, Elsevier, vol. 203(C).
    16. Daniel K. Fetter & Lee M. Lockwood, 2018. "Government Old-Age Support and Labor Supply: Evidence from the Old Age Assistance Program," American Economic Review, American Economic Association, vol. 108(8), pages 2174-2211, August.
    17. Frank van Erp & Niels Vermeer & Daniel van Vuuren, 2013. "Non-financial determinants of retirement," CPB Discussion Paper 243.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    18. Marie-Pier Bergeron-Boucher & Søren Kjærgaard & James E. Oeppen & James W. Vaupel, 2019. "The impact of the choice of life table statistics when forecasting mortality," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 41(43), pages 1235-1268.
    19. Pieter van Baal & Frederik Peters & Johan Mackenbach & Wilma Nusselder, 2016. "Forecasting differences in life expectancy by education," Population Studies, Taylor & Francis Journals, vol. 70(2), pages 201-216, May.
    20. Daniela Weber & Elke Loichinger, 2022. "Live longer, retire later? Developments of healthy life expectancies and working life expectancies between age 50–59 and age 60–69 in Europe," European Journal of Ageing, Springer, vol. 19(1), pages 75-93, March.

    More about this item

    Keywords

    Brazil; Public pension; Retirement; Aging; Labor force; Forecasting;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:joecag:v:18:y:2021:i:c:s2212828x20300694. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/the-journal-of-the-economics-of-ageing .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.