an Eldis Resource
Linkages between pro-poor growth, social programmes and labour market: the recent Brazilian experience
Poverty reduction in spite of less growth? Lessons from Brazil
Authors:
N. Kakwani; M. Neri; H.H. Son
Publisher:
World Institute for Development Economics Research (WIDER), 2009
Known since the 1960s as one of the most unequal countries in the world, poverty and inequality in Brazil have recently declined in spite of negative growth. What factors explain what has occurred in Brazil? This report uses data from the Brazilian National Household Survey from 1995 to 2004 to examine the relationship between growth patterns, poverty and inequality in Brazil during this phase of globalisation, focusing in particular on the impact labour market and social programmes have had in improving the conditions of the poor.
The Brazilian experience is interesting because while per capita real income declined over the period in question, poverty also fell. In other words, it appears to disprove the notion that positive (or negative) growth necessarily leads to a decrease (or increase) in poverty. Specifically, the negative growth during the period 1995–2004, and particularly during 2001-2004, was pro-poor in the sense that the poor made positive gains in their incomes despite the fact that average incomes declined. Therefore, there was a sharp decline in inequality over the period which offset the adverse effect of the negative growth on poverty.
The report breaks down household income sources during the study period in order to examine the relative contribution to per capita total income of labour and non-labour income, respectively. It finds that:
- labour income sources improved more for poor people in relation to non-poor people in the 2000s, and particularly during 2003-04, as a result of increased employment and labour productivity, which led to a fall in inequality
- non-labour income – income derived from social security benefits, cash transfers from social programmes, capital income as well as non-social income (such as rents and private transfers) – also contributed to inequality reduction during 2001-2004, and this contribution was greater than that of labour income
The report concludes that although labour earnings in Brazil were affected by the economic downturn during the 1995–2004 period, therefore, incomes derived from social security and other government transfers played a crucial role in cushioning the consequences of the macro-shocks that occured, specifically among the poorest segments of Brazilian society.
