Nudging the Self-employed into Contributing to Social Security: Evidence from a Nationwide Quasi Experiment in Brazil
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.
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| Format: | Working Papers biblioteca |
| Language: | English |
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Inter-American Development Bank
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| Subjects: | Tax Evasion, D03 - Behavioral Microeconomics: Underlying Principles, H26 - Tax Evasion and Avoidance, H55 - Social Security and Public Pensions, O17 - Formal and Informal Sectors • Shadow Economy • Institutional Arrangements, Social Security;Employability, |
| Online Access: | https://doi.org/10.18235/0000214 https://publications.iadb.org/en/nudging-self-employed-contributing-social-security-evidence-nationwide-quasi-experiment-brazil |
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| Summary: | 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. |
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