Income Distribution in Post1964 Brazil: New Results

Master thesis at Université Paris 13. Advisor: Prof. Marc Lavoie Co-advisor: Prof. Gary Dimsky Abstract: This study systematizes relations between income distribution and economic growth on the Structuralist and Post-Keynesian schools of thought, using such contributions to discuss the evolution of the Brazilian economy in the last fifteen years, when redistribution policies gained a huge momentum as drivers of a new growth strategy. Based on the assumption of its “rise and fall” from 2000 to 2015, the main goal is to discuss possible explanations for such an evolution according to different frameworks of economic theory. Considering the observation of a change on income distribution in this period, this is done by comparing predicted outcomes of such process over economic growth with empirical results, using each particular framework to infer causal relations and explain eventual inconsistencies between theory and reality. The first chapter presents different interpretations on how income redistribution affects economic growth (and other crucial elements of capitalist economies) according to two heterodox schools of thought, Structuralism and the post-keynesian theory of “growth regimes”. The choice of these specific branches is justified not only by the centrality assumed by this relation in their theoretical frameworks as well as by the fact that they are two of the main references for the discussion of the Brazilian case in recent times. The second chapter provides an empirical basis to discuss such interpretations, presenting the evolution of different economic and social indicators from 2000 to 2015. Finally, the last chapter uses the selected economic theories as a background to discuss the outcomes observed during the period of an alleged shift on economic distribution. By recovering predicted causal relations and comparing it to what seems to have occurred in practice, it allows to identify potentially important obstacles for the establishment of a sustainable path of economic development based on a more fair redistribution of income in Brazil, as expected in the beginning of this period.

2000

Income distribution is extremely important for development, since it influences the cohesion of society, determines the extent of poverty for any given average per capita income and the poverty-reducing effects of growth, and even affects people's health. The paper reviews the connections between income distribution and economic growth. It finds that the Kuznets hypothesis that income distribution worsens as levels of income increase is not at all strongly supported by the evidence, while growth rates of income are not systematically related to changes in income distribution. However, evidence is accumulating that more equal income distribution raises economic growth. Both political and economic explanations have been advanced. The finding suggests that more equal income distribution is desirable both for equity and for promoting growth.

Macroeconomic Dynamics, 2008

1982

2008

This paper explores some of the factors linking income growth, income distribution and poverty, historically observed in LACs, with particular reference to the recent experiences in Argentina, Brazil, Chile, Mexico and Venezuela. Given that the LACs have historically shown a high level of income concentration by all measures along with a high level of poverty which has invited a multitude of interpretations, this paper tries to analytically explore some myths on Latin American income distribution that are ingrained in the conventional literature.

World Journal of Agricultural Research, 2014

The paper analyzes the characteristics and evolution of income distribution in the Brazilian agricultural sector, comparing it with the overall distribution or with the non-agricultural sector, considering two dimensions: the per capita household income and the income of occupied persons. The main data source is the National Household Sample Survey (PNAD). In order to fulfill this purpose, the per capita household income was divided into nine components (for Brazil and considering only the agricultural households) to evaluate their contributions to the decrease in inequality. In the second part, the paper analyzes the characteristics of occupied persons and the determining factors of their income, always comparing the agricultural and non-agricultural sectors. The estimated effects were analyzed over the period 1992-2012, adjusting one earnings equation for each year. In both cases (per capita household income and earnings of occupied persons), the agricultural sector showed a markedly different behavior. Regarding the per capita household income, though from 2001 to 2009 the rate of reduction in inequality among agricultural households is similar to the one observed in Brazil as a whole, the determinants associated with this reduction are clearly different in the agricultural sector. Concerning the income of occupied persons, the reduction in inequality is less intense and more irregular in the agricultural sector. The various factors that determine the income of occupied persons also presented distinct behaviors for the agricultural and non-agricultural sectors.

2015

This essay seeks to point the trends and recent dynamics of income distribution in Brazil from various perspectives. While the previous paper (Paper C Brazil) aimed to establish the relation between regimes of accumulation and labour market dynamics with the evolution of income distribution building on a historical perspective, this paper aims to identify, over and beyond the evolution of indicators, the new inequality patterns in order to show how spatial and social cleavages were reorganized as well as the orientation of the country’s class structure. Micro-data provided by the National Household Sample Survey (PNAD, from the Portuguese Pesquisa Nacional por Amostra de Domicílios) of Brazil’s national statistics office Instituto Brasileiro de Geografia e Estatística (IBGE) has been used for selected years between 1979and 2011.

2020

In this paper we analyze Pesquisa Nacional por Amostra de Domicílios Contínua (PNAD Contínua) Microdata from 2012 to 2018 to document how the mid-decade economic recession reversed the trend of pro-poor growth that dated back to the early 2000s. Since the recession, there was a rise in inequality and poverty levels and aggregate welfare decreased. While average incomes surged from 2017 to 2018, they were still below their peak in 2014. More than 80% of all income growth between 2015 and 2018 accrued to the top 5%. Most distributional statistics suggest Brazil in 2018 was either back at the same levels or even worse-off than in 2012. This paper also relies on decomposition techniques to investigate the immediate causes behind this reversal of fortune. We find that the effects of the recession on the labor market explain a lot of the recent changes, but public transfers also played a role in distributional dynamics – either by action or inaction. Social assistance transfers and unempl...

European Economic Review, 2000

This paper examines the evolution of the role of income distribution in the process of development. It presents a uni"ed model that encompasses the transition between distinct regimes that have characterized the relationship between income inequality and the process of development. This uni"ed modeling provides an intertemporal reconciliation for con#icting viewpoints about the e!ect of inequality on economic growth } the classical approach which argues that inequality stimulates capital accumulation and economic growth, and the modern approach which suggests, in contrast, that for su$ciently wealthy economies equality stimulates investment in human capital and economic growth.

2018

While Latin America has historically been considered a region of very high inequality, the performance of most Latin American countries in terms of reduction of income inequality has been remarkable good in the first decade of this century. Given that those improvements took place in a context of rising inequality in most of the world, the evolution of income inequality in the region has caught the attention of researchers and policy makers around the world. Taking advantage of a large database of comparable microdata from household surveys, this article updates the evidence on the trends of income inequality in all Latin American countries for the period 1992-2015. It also provides an analysis of how the distinctive evolution of income inequality in this century in Latin America has changed the position of the different countries of the region in both, the global distribution of income in the world and the global distribution of income in Latin America. Finally, the paper decompose...