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Income Distribution in Brazil During the 2010s: A Lost Decade in the Struggle Against Inequality and Poverty

Author

Listed:
  • Rogério J. Barbosa
  • Pedro H. G. Ferreira de Souza
  • Sergei S. D. Soares

Abstract

In this paper we analyze Pesquisa Nacional por Amostra de Domicílios Contínua (PNAD Contínua) Microdata from 2012 to 2018 to document how the mid-decade economic recession reversed the trend of pro-poor growth that dated back to the early 2000s. Since the recession, there was a rise in inequality and poverty levels and aggregate welfare decreased. While average incomes surged from 2017 to 2018, they were still below their peak in 2014. More than 80% of all income growth between 2015 and 2018 accrued to the top 5%. Most distributional statistics suggest Brazil in 2018 was either back at the same levels or even worse-off than in 2012. This paper also relies on decomposition techniques to investigate the immediate causes behind this reversal of fortune. We find that the effects of the recession on the labor market explain a lot of the recent changes, but public transfers also played a role in distributional dynamics – either by action or inaction. Social assistance transfers and unemployment compensation failed to address rising inequality and poverty in any significant way. At the same time, Social Security contributed to surprisingly large increases in inequality due to the rise in pensions to the well-off. Finally, we show that in the past few years poverty rates were much more sensitive to changes in inequality than in average incomes. Indeed, if there were no increase inequality Brazil would have made further progress in reducing poverty even amid the recession.

Suggested Citation

  • Rogério J. Barbosa & Pedro H. G. Ferreira de Souza & Sergei S. D. Soares, 2020. "Income Distribution in Brazil During the 2010s: A Lost Decade in the Struggle Against Inequality and Poverty," Commitment to Equity (CEQ) Working Paper Series 103, Tulane University, Department of Economics.
    • Handle: RePEc:tul:ceqwps:103
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    References listed on IDEAS

    as
    1. Rodolfo Hoffmann, 2013. "How to measure the progressivity of an income component," Applied Economics Letters, Taylor & Francis Journals, vol. 20(4), pages 328-331, March.
    2. Pedro H. G. Ferreira. de Souza & Rafael Guerreiro Osorio & Luis Henrique Paiva & Sergei Soares, 2019. "Os efeitos do programa Bolsa Família sobre a pobreza e a desigualdade: Um balanço dos primeiros quinze anos," One Pager Portuguese 429, International Policy Centre for Inclusive Growth.
    3. Datt, Gaurav & Ravallion, Martin, 1992. "Growth and redistribution components of changes in poverty measures : A decomposition with applications to Brazil and India in the 1980s," Journal of Development Economics, Elsevier, vol. 38(2), pages 275-295, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Inequality; Poverty; Welfare; Income; Income Transfers;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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