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

Victor Andrade Medeiros dos Santos, Wallace Patrick Santos Farias de Souza and Hudson Gutiery Pinheiro de Medeiros
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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

No 13-2026, TD NEREUS from Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS)

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.

Keywords: Pension Reform; RPPS; Difference-in-Differences; Deconstitutionalization; Actuarial Sustainability (search for similar items in EconPapers)
JEL-codes: C33 H55 H72 H75 (search for similar items in EconPapers)
Pages: 42
Date: 2026
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