Chapter 5 Inequality evolution in Brazil: The role of cash transfer programs and other income sources

Abstract

This chapter provides a detailed analysis of the recent evolution (1993–2007) of Brazilian income inequality. Particularly, we assess the contribution of different income sources to inequality, using three different decomposition techniques: Shorrocks (1982), Lerman and Yitzhaki (1985), and Gini decomposition. We exploit a recent dataset (PNAD, 2004) that allows the identification of different governmental transfer programs (Bolsa-Família, PETI, and BPC) and their impacts into inequality. While informal labor income and self-employment income reduces inequality in almost every measure, the opposite is true for public sector wages. Private formal labor income is becoming less important in explaining Brazilian inequality over time, but its behavior is still important, as it represents more than 40% of the total income. We find that social transfer programs have a limited, but positive impact on equality. On the other hand, dynamics of pensions attenuate the recent path of decreasing inequality in Brazil.

Citation

Guilherme Scorzafave, L. and Marina Carvalho de Lima, É. (2010), "Chapter 5 Inequality evolution in Brazil: The role of cash transfer programs and other income sources", Bishop, J.A. (Ed.) Studies in Applied Welfare Analysis: Papers from the Third ECINEQ Meeting (Research on Economic Inequality, Vol. 18), Emerald Group Publishing Limited, Leeds, pp. 107-129. https://doi.org/10.1108/S1049-2585(2010)0000018008