Social security and living arrangements of the elderly in Brazil

Will the elderly of the developing world follow European and American patterns of living arrangements? Or are culture and preferences different in that the demand for privacy is less in these countries? These are important questions for policy makers and social scientists, in order to determine to what extent "westernization" is taking place in contemporary developing countries.; The Brazilian social security reform of 1988 provides an opportunity to examine these questions. Changes in benefits and eligibility were likely to affect the budget constraints of the elderly. If privacy is viewed as a normal good, then it would be expected that the elderly would choose to live more independently after a pension reform. In fact, the results from econometric analysis, using household survey data before and after the reform, show that a substantial increase in the share of elderly persons living alone was due to rising social security benefits and expanded eligibility. My results are consistent with previous studies realized in the United States, (Costa, 1997; McGarry and Schoeni, 2000; Engelhardt, G. et al., 2002 etc.), showing that elderly persons in developing countries prefer to live alone and value their privacy and independence, as do the elderly in economically developed countries.; Along with income, housing costs represent a constraint to the choice of living arrangements. One important contribution of my work to the literature is that I take into account the effect of housing costs on the living arrangements. My results indicate that housing costs are important determinants of living arrangements of the elderly in Brazil. High housing costs reduce the probability of an elderly person living alone and increase the probability of an elderly person living in his child's house. In general, I find that living alone is positively associated with social security income and negatively associated with housing costs, while living in the child's house is negatively related to income and positively related to housing costs.; Demographic factors, particularly age, kin availability and education, also influence the choice of living arrangements. Conversely, race, regional variation and rural vs. urban residence play a small role in the changes observed in living arrangements over the period 1987-1998.; In conclusion, the empirical evidence indicates that living arrangements are income sensitive, implying that privacy is a valued good. Nevertheless, the social security program cannot sustain the current level of generosity in the long run (Fleury, 2004; MPAS, 2005). A reduction in social security benefits in the future would have a great impact not only on the well-being of the elderly: it would also alter their living arrangements.