[EQ] What Explains the Decline in Brazil's Inequality?

What Explains the Decline in Brazil’s Inequality?

 

Degol Hailu, International Policy Centre for Inclusive Growth (IPC-IG) and

Sergei Suarez Dillon Soares, Institute for Applied Economic Research (IPEA)

International Policy Centre for Inclusive Growth (IPC - IG) Poverty Practice, Bureau for Development Policy, UNDP
OnePager No. 89 July 2009

 

Available online at: http://www.ipc-undp.org/pub/IPCOnePager89.pdf

 

“……..The economics profession has long debated whether there is a trade-off between growth and equity. Countries that pursued inequality-reducing strategies have been warned that growth will be affected, and hence that poverty increases.

The harbingers of doom advocated a growth-focused strategy. Their assumption was that the income of the poor rises in direct proportion to economic growth. The truth is more like this: economies with more equal income distribution are likely to achieve higher rates of poverty reduction than very unequal countries.

 

In this One Pager we consider if this is the case in Brazil. Inequality in Brazil, as measured by the Gini coefficient, fell from 0.59 in 2001 to 0.53 in 2007. Much remains unknown about why inequality has fallen, but two sets of known causes stand out.

The first consists of improvements in education. In the early and mid 1990s, for example, the workforce gained more equal access to education. This is because of universal admission to primary schooling and lower repetition rates. In conjunction with other demographic trends, such as a decline in family size and improvements in family dependency ratios, access to education helped reduce inequality ….….”

 

Reference:

Veras, F., S. Soares, M. Medeiros and R. Osorio (2006).

Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty.
Working Paper # 21. IPC-IG http://www.ipc-undp.org/pub/IPCWorkingPaper21.pdf

 

 

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