Falling Inequality, the New Middle Class and Social Policies Role in Brazil

Transcription

1 Falling Inequality, the New Middle Class and Social Policies Role in Brazil Marcelo Neri CPS e EPGE / Fundação Getulio Vargas 1 mcneri@fgv.br Transformations: Decades Metaphor 1960s-70s Growth (Dictatorship,Inequality) 1980s Redemocratization (Instability) 1990s Stabilization (Kids in school) 2000s - Inequality fall (Formal jobs) 2010s? 2 1

2 Variation of Per Capita Average Income per Income Deciles(2009/2001) Richer Source: CPS/FGV based on microdata from PNAD/IBGE Increase of Average househol Per Capita Income (all sources) 2001 to 2009 Aumento da renda familiar per capita acumulada Menos de 10% de 10% a 20% de 20% a 30% de 30% a 40% Mais de 40% Source: CPS/FGV based on microdata from PNAD/IBGE 2

3 Falling Inequality 2001 to 2009 Higher income increases on excluded groups : Northeast (42% X 16% Southeast) States -Maranhão (46% X 7,2% +São Paulo) Rural Areas (49% X 16% metro cities) Favelas 41,6% Females (38% X Males 16%) Blacks 43% X Whites 21%), Coloured 48% Illiterate (0 years 47% X 12 or + years -17%) HH Heads 0 years (54% X 12 or + years -9%) Inequality Gini s Index Reaching the Lowest Level Recorded The 360º Revolution * * Source: CPS/FGV based on microdata from PNAD, PME and Census / IBGE 1960 extrapolated from Langoni (1973) & 2010 extrapolated from PME 3

4 -16.3% -8.2% -1.6% -2.5% -0.4% -1.5% 0.0% 3.8% 9.6% Contribution of Income Sources to Inequality (Gini) Fall % 17.0 % 66.9 % 0.5 % Labor Earnings Social Security Benefits Other Private Income Bolsa Familia & other social Source: CPS/FGV based on microdata from PNAD/IBGE 7 PER CAPITA INCOME BASED SOCIAL INDICATORS MEAN Inequality POVERTY Renda Média Gini Pobreza Gini dez02 a dez08 dez08 a dez09 dez09 a dez10 Source: CPS/FGV from PME / IBGE microdata Source: CPS/FGV from PME / IBGE microdata 4

5 19,3 22,8 28,8 29,0 28,5 27,2 28,4 27,6 26,7 25,4 28,2 35,2 35,3 MEAN Inequality POVERTY Fonte: CPS/FGV a partir dos microdados da PME / IBGE Elections and Poverty % - Brazil Elections Elections Elections Source: PNAD/IBGE microdata Elections 10 5

6 Elections and Expantions" Variation in Median Income and Electoral Cycles* % % % % % % % % % % % % % % % % % % % % % % % Source: CPS/FGV based on microdata from PNAD/IBGE Obs:In 1991, 1994 and 2000 PNAD did not go to the field Electoral Cycles and Income Policies Equation of the Per capita Household Income various sources All sources Main work Social Social security Programs 1) Votes 0,4192 ** 0,3125 ** 0,5129 ** 0,2857 ** 2) electoral 0,0611 ** 0,0316 ** 0,1051 ** 0,2257 ** 3) Votes * electoral 0,0136 ** 0,0127 ** 0,0274 ** 0,0343 ** ** Significant at 95% Source: CPS/FGV from PNAD/IBGE microdata Obs:controlled by sex, ethnicity, head of the household, educational level, size of the city, migration and State Ln Y = g0 + g1*dv + g2*dy + (D-D)*dV*dY + other controls 12 6

7 Income Distribution Dynamics Rates of Changes Per Year Evolution 2000s Circa % Less 20% Richest Brazil 6,30% 1,70% India 1% 2,80% China 8,50% 15% South Africa 5,80% 7,60% Source: OECD Report Brazil & Brics Mean Income PNAD X GDP PNAD Growth was 1,8 p.p. per year higher than GDP. Source: CPS/FGV & IBGE. * Deflacted by INPC centrered in the end of the month. 7

8 Future Felicity Index Life in 5 Years (2009) No Data Source: Gallup World Poll 2009 Future Felicity Index w.r.t South Africa China Russia India 8

9 Brazil X BRICS under Stiglitz-Sem-Fitoussi OECD Report Recomendations : Emphasize not only GDP Growth, but also: Stocks of Wealth (in particular the Environment); Household Flows Distribution of Resources; Subjective Measures of Well-being Future Happiness Indexes Future Life Satisfaction Individual Future Life Satisfaction Nation Brazil 8,78 6,84 Source: CPS/FGV Processing Microdata From Gallup World Poll

10 The Population Pyramid Classes ABC 13,322,409 19,418,071 19,967,739 65,871,283 91,762,175 94,934, Class C Class AB Source: CPS/FGV based on microdata from PNAD/IBGE 10

11 Forecasts Economic Classes 2009 to 2014 Turning Points of Each Decade Occured in Years ended in Military coup Post oil shock & Electoral loss - Begins political distension 1984 Diretas Já -Redemocratization 1994 Real Plan - Stabilization 2004 Growth and Employment resumption - biggest Inequality fall 2014s?

12 Is it really Sustainable? Income Simulator Is it really Sustainable? The synthetic indicator of potential consumption power increased by 22.6% between 2003 and 2009, while the index of income generation raised 31.2%. Difference of 38% in favor of the production side. 12

13 657, , , ,433 1,253,981 1,228, ,110 1,523,276 1,617,392 1,452,204 2,201,406 Net Generation of Formal Employment - BRAZIL Yearly (2000 to 2010*) * Source: CAGED / MTE * up to september Most Valuable Social Policies CCTs (Bolsa Familia) Education Profficiency Targets (Ideb = from 3.8 to 6 by 2021) Microcredit (Crediamigo of NE) Minimum Wage? 13

14 mar-02 mai-02 jul-02 set-02 nov-02 jan-03 mar-03 mai-03 jul-03 set-03 nov-03 jan-04 mar-04 mai-04 jul-04 set-04 nov-04 jan-05 mar-05 mai-05 jul-05 set-05 nov-05 jan-06 mar-06 mai-06 Salário Mínimo Real Proporção de Pobres (P0) Jan/92 Mai/92 Set/92 Jan/93 Mai/93 Set/93 Jan/94 Mai/94 Set/94 Jan/95 Mai/95 Set/95 Jan/96 Mai/96 Set/96 Jan/97 Mai/97 Set/97 Jan/98 Mai/98 Set/98 Jan/99 Mai/99 Set/99 Jan/00 Mai/00 Salário Mínimo e Proporção de Pobres (P0) Brasil Metropolitano % 35% 33% 31% 29% 27% 25% 23% Salário Mínimo Proporção de Pobres Fonte: PME/IBGE - Elaboração: CPS/IBRE/FGV Minimum Wage and Labor Market Poverty % 24% % 22% 21% 20% 19% M.W. 18% 17% Salário Mínimo Proporção de Pobres Social Policy: New MVPs Target to Erradicate Extreme Poverty by 2014 Secondary & Professional Education SMEs (Access to Consumer Markets) Bolsa Familia

15 Bolsa Familia 2.0 New Challenges Integrate other programmes Intra-Household Distribution Channels BF uses mothers (in + than 90 % of the cases) Develop motivated social agents Supply of social services Conditionalitities redundant. Lazyness Effect (EITC) Political Cycles Bolsa Familia Exit/Entry Doors etc Opportunities Generation Conditionalities Inputs & Outputs Priority Access & EITC Pre-Schooling 0-6 School Quality nd Bolsa-Escola Poverty Reduction Direct Effect Targeting More to the Poorest Imputed Income Bolsa Saneamento (OBA) Take Advantage of Opportunities & Smooth Shocks MicroCredit &Insurance Smooth Electoral Cycles Transfers as Collateral Social Targets & Social Credit 15

16 Principles to Pursue in the New Social Policy Setting Targets Radomized Results Assessment Social Federalism Use CadÚnico Public-Private Interaction Productive Services Look at the Demand Side Open Entry Doors to Markets During the last years we gave the Poor to the Market(consumer), we need to give markets to the poor Formal Education Professional Education Microcredit Formalization & Security (UPPs) Microinsurance 16

17 Thanks! Marcelo Neri CPS & EPGE / Fundação Getulio Vargas 17