"Measured by the Gini coefficient, income inequality in Brazil rose from 0.57 in 1981 to 0.63 in 1989, before falling back to 0.56 in 2004. This latest figure would lower Brazil's world inequality rank from 2nd (in 1989) to 10th (in 2004). Poverty incidence also followed an inverted U-curve over the past quarter century, rising from 0.30 in 1981 to 0.33 in 1993, before falling to 0.22 in 2004. Using standard decomposition techniques, this paper presents a preliminary investigation of the determinants of Brazil's distributional reversal over this period. The rise in inequality in the 1980s appears to have been driven by increases in the educational attainment of the population in a context of convex returns, and by high and accelerating inflation. While the secular decline in inequality, which began in 1993, is associated with declining inflation, it also appears to have been driven by four structural and policy changes which have so far not attracted sufficient attention in the literature, namely sharp declines in the returns to education; pronounced rural-urban convergence; increases in social assistance transfers targeted to the poor; and a possible decline in racial inequality. Although poverty dynamics since the Real Plan of 1994 have been driven primarily by economic growth, the decline in inequality has also made a substantial contribution to poverty reduction. "--World Bank web site.

Measured by the Gini coefficient, income inequality in Brazil rose from 0.57 in 1981 to 0.63 in 1989, before falling back to 0.56 in 2004. This latest figure would lower Brazil's world inequality rank from 2nd (in 1989) to 10th (in 2004). Poverty incidence also followed an inverted U-curve over the past quarter century, rising from 0.30 in 1981 to 0.33 in 1993, before falling to 0.22 in 2004. Using standard decomposition techniques, this paper presents a preliminary investigation of the determinants of Brazil's distributional reversal over this period. The rise in inequality in the 1980s appears to have been driven by increases in the educational attainment of the population in a context of convex returns, and by high and accelerating inflation. While the secular decline in inequality, which began in 1993, is associated with declining inflation, it also appears to have been driven by four structural and policy changes which have so far not attracted sufficient attention in the literature, namely sharp declines in the returns to education; pronounced rural-urban convergence; increases in social assistance transfers targeted to the poor; and a possible decline in racial inequality. Although poverty dynamics since the Real Plan of 1994 have been driven primarily by economic growth, the decline in inequality has also made a substantial contribution to poverty reduction.

In this study, we document the decline in income inequality and a convergence in consumption patterns in Brazilian states in a new database constructed from micro data from the national households’ survey. We adjust the state-Gini coefficients for spatial price differences using information on households’ rental prices available in the survey. In a panel regression framework, we find that labor income growth, formalization, and schooling contributed to the decline in inequality during 2004-14, but redistributive policies, such as Bolsa Família, have also played a positive role. Going forward, it will be important to phase out untargeted subsidies, such as public spending on tertiary education, and contain growth of public sector wages, to improve budgetary efficiency and protect gains in equality.

This book breaks new ground by accounting for the welfare implications of both severe inequality and environmental degradation and developing a sustainable development indicator that incorporates changes over time in each of these dimensions. The model is applied to data from Brazil spanning the 1965 -1998 period. The book's findings cast significant doubt on the proposition that rapid economic growth in Brazil has resulted in comparable welfare gains. The evidence presented more generally illustrates the often unsustainable nature of rapid GDP growth phases, as well as the general unreliability of GDP growth as an indicator of well-being improvement. The specific policy implication is that Brazil should discontinue - or at least severely curtail - the regressive and resource intensive economic policies it has followed in recent decades in the interest of welfare improvement not only for the poorer groups in society, but for future generations of Brazilians as well.

In terms accessible to non-economists, Marcos José Mendes describes the ways democracy and inequality produce low growth in the short and medium terms. In the longer term, he argues that Brazil has two paths in front of it. One is to create the conditions necessary to boost economic performance and drive the country toward a high level of development. The other is to fail in untying the political knot that blocks growth, leaving it a middle-income country. The source of his contrasting futures for Brazil is inequality, which he demonstrates is a relevant variable in any discussion of economic growth. Inequality illuminates causes of seemingly-unconnected problems. This book, which includes freely-accessible documents and datasets, is the first in-depth analysis of an issue that promises to become increasingly prominent. - Contrasting visions of Brazil's future described in economic terms - Easy-to-understand graphs and tables illustrate analytical arguments - All Excel-based data available on a freely-accessible website

What makes Brazil so unequal? This title looks at this question and shows how inequalities weaken Brazil's economic development and what are the best policy options to reduce this inequity.