The determinants of the      sharp improvementin income distribution in Brazil          Ricardo Paes de Barros            ...
1. Evaluating the magnitudeof the decline in poverty and         inequality
Evolution of extreme poverty rate in Brazil: 1990-2009                                     25                             ...
Evolution of extreme poverty in Brazil: 1999-2009                                     20                                  ...
Evolution of extreme poverty in Brazil: 1999-2009                                     20                                  ...
Evolution of the degree of inequality in per capita income:                                                              B...
Average annual growth rate in per capita income by tenths of the                                             distribution:...
Distribution of countries according to the average per capita GDP                                                         ...
2. Expansion of opportunities
Reduction in infant mortality adjusted for inequality of opportunity:                                           Brazil 199...
Reduction in malnutrition and lack of access to basic health services:                                      Brazil, 1996-2...
Reduction in educational deficit adjusted for the inequality of                              opportunity: Brazil 1999-2009...
Reduction in deficits in access to information, water and               sanitation adjusted for the inequality of opportun...
3. Immediate Determinants
Non labor income      Labor income perper capita                     per adult           adult working income             ...
4. The Contribution of theBrazilian Transfer Programmes
Brazilian Income Transfer ProgrammesI. Bolsa Família  Conditional cash transfer programme to poor families,   conditional...
Brazilian Income Transfer ProgrammesII. Pension to Poor Elderly or Disabled People (BPC)  Income transfer to poor elderly...
Brazilian Income Transfer ProgrammesIII. Rural Pension  Income transfer to rural poor old people  One minimum wage trans...
Distribution of Bolsa Família beneficiaries by percentile of the                                              distribution...
Distribution of Bolsa Família beneficiaries by percentile of the                                               distributio...
Determinants of Bolsa Família targeting                                         Percentage of the                         ...
The contribution of transfers to the recent decline in income inequality and                                poverty: Brazi...
Extreme poverty by age:                                                                                          Brazil, 2...
Continuity of results, not necessarily of policies                                                             Extreme pov...
5. The Productive Inclusion        of the Poor
Table 1: Characteristics of the income growth of the 20% poorest:                                     Brasil, 2003-2009   ...
The Productive Inclusion of the Poor Brazil has demonstrated a significant capacity of promoting the  productive inclusio...
The Productive Inclusion of the Poor For the effective eradication of extreme poverty is necessary that  both private and...
The Productive Inclusion of the Poor Regarding the vital role of public policies: it is important to  guarantee that the ...
6. The magnitude of the economic crisis     in Brazil and the nature of theadjustment process in the labor market
Real GDP: Brazil, 2008 and 2009                      150                      145                      140REal GDP (1995=1...
Real GDP - Secondary sector: Brazil, 2008 and 2009                      140                      135                      ...
Accumulated net creation of formal jobs:                                                                 Brazil, 2000-2010...
Accumulated net creation of formal jobs:                                                                 Brazil, 2000-2010...
Monthly job net creation relative to the average for the previous five years:                                             ...
Monthly job creation relative to the average for the previous five years:                                                 ...
Monthly job creation and job destruction: Brazil, 2008-09                                                         1500    ...
Strategic Themes - SSAEERRADICATION OF EXTREME          SOCIAL, SPATIAL AND SYMBOLICPOVERTY VIA MOST EFFECTIVE USE   INTEG...
The determinants of the sharp improvement in income distribution in Brazil
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The determinants of the sharp improvement in income distribution in Brazil

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Presentation by Mr. Ricardo Paes de Barros, Ms Rosane Mendonça and Ms Raquel Tsukada from the Secretariat of Strategic Affairs of the Presidency of Brazil on 27 March to the Uganda Delegation.
(http://pressroom.ipc-undp.org/2012/uganda-mission-visits-brazil-for-first-ever-exchanges-on-social-development/)

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The determinants of the sharp improvement in income distribution in Brazil

  1. 1. The determinants of the sharp improvementin income distribution in Brazil Ricardo Paes de Barros Rosane Mendonça Raquel Tsukada Republic of Uganda Delegation Visit Brasília, 27 March 2012
  2. 2. 1. Evaluating the magnitudeof the decline in poverty and inequality
  3. 3. Evolution of extreme poverty rate in Brazil: 1990-2009 25 22.6 22.9 23 Cardoso Lula 22.1Percentage of the population below 21 Real Plan the extreme poverty line 19 17.7 17.8 17.4 17.4 17.5 17.3 16.8 16.5 17 15.1 15 13.3 13 10.8 11 Millennium Development Goal for 2015 10.3 8.8 9 8.4 7 5 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
  4. 4. Evolution of extreme poverty in Brazil: 1999-2009 20 19 Reduction in extreme poverty necessary to achieve the MDG by 2015 18Percentage of the population below Extreme poverty in 2001 17 the extreme poverty line 16 4.0 15 14 13 12 11 Millennium Development Goal for 2015 Total reduction in 10 9.1 extreme poverty 9 Extreme poverty in 2009 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  5. 5. Evolution of extreme poverty in Brazil: 1999-2009 20 19 Reduction in extreme poverty necessary to achieve the MDG by 2015 18Percentage of the population below Extreme poverty in 2001 17 the extreme poverty line 16 4.0 15 5.5 Poverty evolution without growth 14 13 Reduction in extreme poverty due to the reduction in inequality 12 11 Millennium Development Goal for 2015 Total reduction in 10 9.1 extreme poverty 9 Extreme poverty in 2009 8 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  6. 6. Evolution of the degree of inequality in per capita income: Brazil, 1995-2009 0.65 0.634 0.64 0.63 0.615 0.62 0.612 0.61 0.599Gini coefficient 0.599 0.602 0.600 0.60 0.588 0.589 0.600 0.598 0.592 0.594 0.59 0.596 0.580 0.587 0.594 0.587 0.58 0.582 0.581 0.57 0.569 0.566 0.56 0.560 0.552 0.55 0.544 0.54 0.539 0.53 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
  7. 7. Average annual growth rate in per capita income by tenths of the distribution: Brazil, 2001-2009 9 Bottom 10% 8 7Annual growth rate (%) 6 5 4 Top 10% 3 Average 2 1 0 First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth
  8. 8. Distribution of countries according to the average per capita GDP growth rate between 1990 and 2005 15 13Average annual growth rate (%) 11 China 9 7 Brazilian bottom 10% 5 3 Germany 1 Brazilian top 10% -1 -3 Haiti -5 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Distribution of countries (%)
  9. 9. 2. Expansion of opportunities
  10. 10. Reduction in infant mortality adjusted for inequality of opportunity: Brazil 1996-2006Postinfant mortality (1 to 5 years) Faster than Slower than required by the required by the Postneonatal mortality MDG MDG Reduction to 1/2 in 25 years Neonatal mortality Remaining level of mortality Reduction Reduction Child mortality (up to 5 to a 1/3 in years) 25 years Infant mortality (first 2006 1996 year) 0 10 20 30 40 50 60 70 80 90 100 Infant mortality at the end as a percentage of the initial level
  11. 11. Reduction in malnutrition and lack of access to basic health services: Brazil, 1996-2006 Malnutrition,underweight: weight for age Faster than Slower than required by the required by the MDG MDG Malnutrition, wasting: Reduction weight for height to 1/2 in 25 years Malnutrition, stunting: height for age Reduction to 1/3 in 25 years Postnatal care Remaining deficits Prenatal care 2006 Reduction 1996 0 10 20 30 40 50 60 70 80 90 100 Malnutrition and lack of access to basic heath at the end as a percentage of the initial level
  12. 12. Reduction in educational deficit adjusted for the inequality of opportunity: Brazil 1999-2009 Has not completedsecondary school at age 18 Has not completed eighth grade at age 16 Faster than Slower than required by the required by the Has not completed eighth MDG MDG grade at age 15 Has not completed forth grade at age 11 ReductionNot attending school (15-17 to 1/2 in 25 Remaining educational deficit years olds) years Not attending school (7-14 years olds) Reduction Not attending school (5-6 to a 1/3 in 25 years Reduction years olds) Child labor (10-14 years 1999 2009 olds) 0 10 20 30 40 50 60 70 80 90 100 Educational deficit at the end as a percentage of the initial level
  13. 13. Reduction in deficits in access to information, water and sanitation adjusted for the inequality of opportunity: Brazil 1999-2009Lack of adequate acess to water and sanitation Faster than Slower than required by the required by the MDG MDGLack of adequate acess to sanitation Reduction to a 1/2 in 25 yearsLack of adequate acess to water Remaining deficit in access Reduction to a 1/3 in 25 years Adequate access to information 2009 1999 Reduction 0 10 20 30 40 50 60 70 80 90 100 Deficit in access to information, water and sanitation at the end as a percentage of the initial level
  14. 14. 3. Immediate Determinants
  15. 15. Non labor income Labor income perper capita per adult adult working income y a. o u.w Percentage of adults Percentage of adults working
  16. 16. 4. The Contribution of theBrazilian Transfer Programmes
  17. 17. Brazilian Income Transfer ProgrammesI. Bolsa Família Conditional cash transfer programme to poor families, conditional on children attending school and health care visits Small per capita transfer Number of beneficiaries in 2009: 13 millions families (around 35 million individuals) Annual expenditure in 2009: R$ 10 billions (0,4% do PIB)
  18. 18. Brazilian Income Transfer ProgrammesII. Pension to Poor Elderly or Disabled People (BPC) Income transfer to poor elderly (> 64) and disabled people One minimum wage transfer Number of beneficiaries in 2009: 3,5 million Annual expenditure in 2009: R$ 18,7 billions (0,6% do PIB)
  19. 19. Brazilian Income Transfer ProgrammesIII. Rural Pension Income transfer to rural poor old people One minimum wage transfer Number of beneficiaries in 2009: 8,1 millions Annual expenditure in 2009: R$ 44 billions (1,7% do PIB)
  20. 20. Distribution of Bolsa Família beneficiaries by percentile of the distribution of per capita income: Brazil 5,0 Red de Oportunidades - Panama 4,5 4,0 SUF - Chile 3,5 3,0percentage 2,5 Bolsa Família 2,0 1,5 1,0 0,5 Oportunidades 0,0 0 10 20 30 40 50 60 70 80 90 100 percentiles of the distributionSource: Estimates based on Pesquisa Nacional por amostra deDomicílios (PNAD) from 2004 to 2008 and Encuesta de Hogares, Panama, 2008 and CASEN, Chile, 2003.Note1: The per capita income that defined the hundreths of population excludes the income of the benefit.
  21. 21. Distribution of Bolsa Família beneficiaries by percentile of the distribution of per capita income: Brazil 4,00 3,50 2007 3,00 2004 2,50percentage 2,00 1,50 1,00 0,50 0,00 0 10 20 30 40 50 60 70 80 90 100 percentiles of the distributionSource: Estimates based on Pesquisa Nacional por amostra deDomicílios (PNAD) from 2004 to 2007.
  22. 22. Determinants of Bolsa Família targeting Percentage of the benefits going to families ContributionTargeting mechanism with per capita income (%) below R$120Without any targeting mechanism(random allocation) 19,8Targeting solely based on municipalcotas proportional to poverty 32,0 33Random selection from the CadastroÚnico 55,0 62Targeting using the information onincome from Cadastro Único 57,1 6
  23. 23. The contribution of transfers to the recent decline in income inequality and poverty: Brazil, 2001-2007 Percentage Percentage Extreme Extreme Gini Poverty gap Poverty of extremelyIncome sources of poor poverty gap poverty coefficient (P1) severity (P2) poor (P0) (P1) severity (P2) (P0)Total transfers 49 42 51 57 52 66 79 Public transfers 49 41 50 57 51 67 82 Pensions and retirement benefits 28 30 25 22 22 19 18 Benefício de Prestação Continuada (BPC) 10 6 9 11 7 14 19 Bolsa Família 13 3 15 25 19 39 57Source: Estimations produced based on the Pesquisa Nacional por Amostra de Domicílios (Pnad) 2001 and 2007.
  24. 24. Extreme poverty by age: Brazil, 2009 50 45Percentage of the population below the 40 35 extreme poverty line 30 25 20 15 Excluding public transfers 10 Average including transfers 5 Including public transfers 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 Age (years)
  25. 25. Continuity of results, not necessarily of policies Extreme poverty by age after transfers: Brazil, 2009 20 18 16Percentage of the population below the 14 extreme poverty line 12 10 Average 8 6 4 2 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 Age (years)
  26. 26. 5. The Productive Inclusion of the Poor
  27. 27. Table 1: Characteristics of the income growth of the 20% poorest: Brasil, 2003-2009 VariationIndicator 2003 2009 Absolut Relative Annual growth (R$/month) (%) rate (%)Income per capita (R$/month) 62 100 39 63 8,4Percentage of adults (%) 55,0 58,0 3,0 5,5 0,9Non work-related income per adult (R$/month) 25 49 25 100 12,3Work-related income per adult (R$/month) 87 123 35 40 5,8Percentage of the family income originated from 78,0 71,0 -7,0 -9,0 .....work (%)Income per capita if only work-related income ..... 81* 19 31 4,7had grown (R$/month)Source: Estimates obtained from the household survey Pesquisa Nacional por Amostra de Domicílios (PNAD) in 2003 and 2009.Note: * Income per capita if w ork-related income w ere as of 2009, all else constant, in 2003 values.
  28. 28. The Productive Inclusion of the Poor Brazil has demonstrated a significant capacity of promoting the productive inclusion of its most vulnerable segments. Conditions for a successful productive inclusion:  Availability of good opportunities  Guarantee for effective access  Protagonism
  29. 29. The Productive Inclusion of the Poor For the effective eradication of extreme poverty is necessary that both private and public sectors contribute as much as possible to the productive inclusion of the low-income population. The public sector must complement the initiatives implemented by the private sector to generate productive opportunities in communities with less-dynamic economies:  Direct creation of productive opportunities  Legislation, supervision and tripartite agreements  Promotion of the local economy
  30. 30. The Productive Inclusion of the Poor Regarding the vital role of public policies: it is important to guarantee that the poorest workers will have effective access to the available productive opportunities.  Providing information about locally available opportunities  Training and overcoming discrimination  Guaranteeing minimum conditions
  31. 31. 6. The magnitude of the economic crisis in Brazil and the nature of theadjustment process in the labor market
  32. 32. Real GDP: Brazil, 2008 and 2009 150 145 140REal GDP (1995=100) 135 130 Current 125 Previous year Average of three previous years 2008 2009 120 3rd quarter 4th quarter 1st quarter 2nd quarter
  33. 33. Real GDP - Secondary sector: Brazil, 2008 and 2009 140 135 130REal GDP (1995=100) 125 120 Current 115 Previous year Average of three previous years 2008 2009 110 3rd quarter 4th quarter 1st quarter 2nd quarter
  34. 34. Accumulated net creation of formal jobs: Brazil, 2000-2010 12,0 11,0 10,0 9,0Accumulated job creation (millions) 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  35. 35. Accumulated net creation of formal jobs: Brazil, 2000-2010 12,0 11,0 10,0 9,0Accumulated job creation (millions) 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  36. 36. Monthly job net creation relative to the average for the previous five years: Brazil, 2008-09 200 150 100Difference in job creation (thousand jobs per month) 50 0 -50 -100 -150 -200 -250 -300 -350 -400 -450 2008 2009 -500 October November December January February March April May June July August September
  37. 37. Monthly job creation relative to the average for the previous five years: Brazil , 2008-09 100 80 Primary Secondary 60Difference in job creation (thousand jobs per month) Superior 40 20 0 -20 -40 -60 -80 -100 -120 2008 2009 -140 October November December January February March April May June July August September
  38. 38. Monthly job creation and job destruction: Brazil, 2008-09 1500 1450job creation and destruction (thousand jobs per month) 1400 1350 1300 1250 1200 1150 Creation 1100 Destruction 1050 2008 2009 1000 October November December January February March April May June July August September
  39. 39. Strategic Themes - SSAEERRADICATION OF EXTREME SOCIAL, SPATIAL AND SYMBOLICPOVERTY VIA MOST EFFECTIVE USE INTEGRATION IN LARGE CITIESOF EXISTING POLICY AND SOCIALPROGRAMSPROMOTION AND CONSOLIDATION HOW TO DEVELOP A NATIONALOF A PRODUCTIVE AND DYNAMIC SYSTEM OF EVALUATION OFNEW MIDDLE CLASS, RISK-FREE OF PUBLIC POLICYRETURNING TO POVERTYOPORTUNITY FOR A FULL AND FORMULATING STRATEGIES FORCOMPREHENSIVE INCLUSIVE DEVELOPMENT WITHDEVELOPMENT IN EARLY STATESCHILDHOODOPORTUNITIES FOR A HEALTHY AND STRESSING THE PROMOTION OFPRODUCTIVE TRANSITION TO ADULT PRINCIPLES IN THE DESIGN OFLIFE SOCIAL POLICIES WITHOUT LIMITING THE RESULTS

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