This paper explores the effects of the retirement rule of the Brazilian social security system, which gives a lifetime income after a certain number of working years, on the individual choices with respect to entrance and exit from the labor force. These results are compared with those ones that would be obtained under the rule of retirement after a certain age and under a capitalization regime in which the individual himself provides for his retirement. Our main finding is that the Brazilian regime incentives early entrance and early retirement from the labor force, a large waste of resources for society.
