Retirement and the labor market: an analysis using regression discontinuity design

Abstract

Social security is an insurance that replaces the taxpayer’s income when there is no capacity to work. However, the rules in effect allow a group of individuals to retire relatively early, when they still have work capacity, and might impact the decisions of individuals in labor market, increasing the propensity to inactivity. To get an idea of this impact, we explore the discontinuity of the rules on age retirement with regression discontinuity design (RDD). Our results indicate that retirement has a significant effect on the urban labor market in Brazil, but does not influence the work conditions of those who remain occupied.