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Deconstitutionalization of Pension Rules and Subnational Fiscal Sustainability: Evidence from Brazilian Municipalities

Author

Listed:
  • Victor Andrade Medeiros dos Santos

    (Universidade Federal da Paraíba, PPGE/UFPB)

  • Wallace Patrick Santos Farias de Souza

    (Universidade Federal da Paraíba, PPGE/UFPB)

  • Hudson Gutiery Pinheiro de Medeiros

    (Universidade Federal do Rio Grande do Norte, PPECO-UFRN)

Abstract

This study analyzes the impact of Constitutional Amendment No. 103/2019 on the sustainability of municipal Public-Sector Pension Schemes (RPPS) in Brazil, focusing on actuarial deficits. Using the deconstitutionalization of pension rules as an identification mechanism, the study exploits variation in municipal responses after the transfer of legislative autonomy to subnational governments. Employing the staggered Difference-in-Differences (staggered DiD) approach, the results indicate a statistically significant reduction in actuarial deficits, ranging from 19.73% to 23.32%. The findings suggest that long-term sustainability depends on effective local governance, administrative capacity, and sound management of pension assets and institutional arrangements across different municipal contexts.

Suggested Citation

  • Victor Andrade Medeiros dos Santos & Wallace Patrick Santos Farias de Souza & Hudson Gutiery Pinheiro de Medeiros, 2026. "Deconstitutionalization of Pension Rules and Subnational Fiscal Sustainability: Evidence from Brazilian Municipalities," TD NEREUS 13-2026, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS).
    • Handle: RePEc:ris:nereus:023544
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    Keywords

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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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