Inequality And Economic Development In Brazil

This publication is part of a series of country reports which examine the work of the World Bank on the economic and related conditions of member countries, published with the approval of the subject government. This study focuses on three key issues: the impact of inequalities on Brazil's development; the reasons why Brazil has a very high and persistent level of income inequality compared to other countries; and the role of public policy in addressing the problem.

Acknowledgments

xiii

Abbreviations and Acronyms

xv

Executive Summary

xvii

PART I: Policy Report

C. E. Velez

R. P. de Barros

F. Ferreira

Introduction

3

(2)

Why Do Inequalities Matter for Brazil?

5

(6)

Why is Brazil Such an Unequal Society?

11

(26)

Inequality in Brazil

11

(9)

The Causes of Inequality

20

(8)

Public Policy and Equity

28

(9)

What Can and Should Public Policy Do About Inequality in Brazil?

37

(22)

Human Assets and Land: Endowments and Prices

38

(11)

Public Social Expenditure and Taxation

49

(10)

Conclusions

59

(22)

Appendix

63

(4)

Bibliography

67

(14)

PART II: Background Papers

Poverty and Inequality in Brazil: New Estimates from Combined PPV-PNAD Data

81

(24)

C. Elbers

J. O. Lanjouw

P. Lanjouw

P. G. Leite

Data

83

(1)

Methodology

84

(3)

Implementation

87

(1)

Poverty and Inequality at the Regional Level

88

(4)

Poverty and Inequality at Lower Levels of Disaggregation

92

(8)

Inequality Decompositions

100

(2)

Conclusions

102

(1)

References

103

(2)

Beyond Oaxaca-Blinder: Accounting for Differences in Household Income Distributions across Countries

105

(44)

F. Bourguignon

F. H. G. Ferreira

P. G. Leite

Introduction

106

(2)

Income Distribution in Brazil, Mexico, and the United States

108

(4)

A General Statement of Statistical Decomposition Analysis

112

(2)

The Decompositions in Practice: A Specific Model

114

(6)

The Brazil-United States Comparison

120

(11)

The Brazil-Mexico Comparison

131

(3)

Conclusions

134

(1)

Appendix

135

(12)

References

147

(2)

Inequality of Outcomes, Inequality of Opportunities, and Intergenerational Education Mobility in Brazil

149

(30)

F. Bourguignon

F. Ferreira

M. Menendez

Introduction

150

(1)

Theoretical Background

151

(2)

Opportunities and the Distribution of Individual Wages

153

(14)

Simulating the Effects of the Inequality of Opportunities on Earnings

167

(5)

The Effects of the Inequality of Opportunities on the Distribution of Household Income

172

(5)

Summary and Conclusion

177

(1)

References

178

(1)

Indirect Taxation Reform: Searching for Dalton-Improvements in Brazil

179

(24)

C. E. Velez

S. W. Vianna

F. G. Silveira

L. C. Magalhaes

Introduction

180

(1)

Taxation in Brazil: Recent Evolution, Trends and Issues

181

(3)

What is the Impact of Taxation on the Distribution of Secondary Income?

184

(4)

Dalton Improving Tax Reforms: Analytical Framework

188

(2)

Identifying Potential Candidates for Raising and Reducing Taxes

190

(3)

The Pairs of Tax Changes that Satisfy the Dalton Improvement Condition

193

(3)

Conclusions

196

(1)

Appendix

196

(5)

References

201

(2)

Schooling Expansion in Demographic Transition: A Transient Opportunity for Inequality Reduction in Brazil

203

(22)

C. E. Velez

M. Medeiros

S. Soares

Introduction

204

(2)

Demographic Background

206

(1)

Methodology and Data

207

(1)

The Evolution of Education Between Cohorts: Monotonically Increasing Mean, Decreasing Inequality and Inverted U-Shaped Mean-Variance Schedule

208

(2)

The Increasing Stock-to-Cohort Time Lag of Educational Attainment

210

(2)

Simulations: Permanent and Temporary Acceleration of Educational Attainment

212

(3)

Conclusions

215

(2)

Appendix

217

(7)

Bibliography

224

(1)

Ex-ante Evaluation of Conditional Cash Transfer Programs: The Case of Bolsa Escola

225

(24)

F. Bourguignon

F. H. G. Ferreira

P. G. Leite

Introduction

225

(2)

Main Features of the Bolsa Escola Program

227

(1)

A Simple Framework for Modeling and Simulating Bolsa Escola

228

(2)

Estimation of the Discrete Choice Model

230

(3)

Descriptive Statistics and Estimation Results

233

(8)

An ex ante Evaluation of Bolsa Escola and Alternative Program Designs

241

(5)

Conclusions

246

(1)

References

247

(2)

The Dynamics of the Skill-Premium in Brazil: Growing Demand and Insufficient Supply?

249

(1)

A. Blom

C. E. Velez

Introduction

250

(2)

Wage-inequality and Education

252

(6)

Relative Supply, Relative Demand, and the Skill-premium

258

(9)

What If? Alternative Paths for Supply and Wage-inequality in the Past

267

(1)

Summary

268

(2)

Appendix

270

(10)

References

280

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Inequality And Economic Development In Brazil

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