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Nudging the Self-employed into Contributing to Social Security: Evidence from a Nationwide Quasi Experiment in Brazil

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  • Villa, Juan Miguel
  • Fernandes, Danilo
  • Bosch, Mariano

Abstract

This paper studies the first large scale effort by the Brazilian government to increase the social security compliance of self-employed workers using behavioral interventions. In 2014, the Brazilian Ministry of Social Security gradually delivered by postal mail a booklet reminding nearly 3 million self-employed workers their obligation to contribute to social security. We find that, sending the booklet increased payments by 15 percent and compliance rates by 7 percentage points. This increase is concentrated around the month the booklet was delivered and disappears three months after the intervention, a pattern known as action and backsliding. The relatively brief increase in payments outweighs the cost of sending the booklet by at least a factor of 2. Our results suggest that active behavioral interventions could be used as policy instruments that are orders of magnitude more cost-effective than subsides to increase social security contributions in developing countries, particularly for the self-employed.

Suggested Citation

  • Villa, Juan Miguel & Fernandes, Danilo & Bosch, Mariano, 2015. "Nudging the Self-employed into Contributing to Social Security: Evidence from a Nationwide Quasi Experiment in Brazil," IDB Publications (Working Papers) 7313, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:7313
    DOI: https://doi.org/10.18235/0000214
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    References listed on IDEAS

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    Cited by:

    1. Thonipara, Anita & Proeger, Till & Haverkamp, Katarzyna, 2019. "Soziale Lage und Alterssicherung Selbstständiger im Handwerk - Literaturüberblick und Forschungsagenda," Göttinger Beiträge zur Handwerksforschung 25, Volkswirtschaftliches Institut für Mittelstand und Handwerk an der Universität Göttingen (ifh).
    2. Jessen, Jonas & Kluve, Jochen, 2021. "The effectiveness of interventions to reduce informality in low- and middle-income countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 138.
    3. 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.
    4. Fietz, Katharina & Lakemann, Tabea & Beber, Bernd & Priebe, Jan & Lay, Jann, 2025. "Formalizing employment in Africa's small firms: Experimental evidence from Côte D'Ivoire," Ruhr Economic Papers 1149, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

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    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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