Despite fluctuations, Brazilian income remained concentrated at the top between 1926 and 2015, study says

Photo: Dylan Passmore. Subway passengers in São Paulo, 2006, Brazil <http://bit.ly/1jNlqZo>.

 

By Júlia Matravolgyi, Communications Intern*

Brasilia, 25 April 2018 - Although the gross domestic product (GDP) per capita increased twelvefold between 1920 and 2015 in Brazil, the concentration of income at the top of the social pyramid remained extremely high. Income inequality often fluctuates in tandem with major political and institutional changes, according to a new study released by the International Policy Centre for Inclusive Growth (IPC-IG). In "A History of Inequality: top incomes in Brazil, 1926-2015", Pedro H. Ferreira de Souza—researcher at the Institute for Applied Economic Research (Ipea)—uses income tax data to estimate total income shares for Brazil from 1926 to 2015.

Here are five highlights of the study about the distribution of income in Brazil since the 1920s:

  1. On average, the share of total income received by the top 1 per cent was about 24 per cent, a figure about twice as high as presently observed in most countries.
  2. Inequality rose and declined, sometimes quite abruptly, in tandem with major political and institutional changes. The concentration at the top first soared during Getúlio Vargas’s Estado Novo dictatorship (1937–1945) and faded when the Second World War conditions dissipated. Another surge happened after the Brazilian military coup of 1964, in the wake of a wide range of pro-business reforms.
  3. Democracy is a necessary, but not sufficient, condition for redistribution— actual policymaking is crucial. “Giving with one hand and taking with the other” is commonplace in modern States, Souza’s analysis says: most redistributive transfers, such as the flagship Bolsa Família programme, pale budget-wise when compared to the tax breaks and subsidised credit granted to big businesses.
  4. Top income shares have remained quite stable since 2000, but ‘tax-adjusted’ Gini coefficients suggest a smaller and shorter, though still sizeable, decrease in inequality. The adjusted Ginis confirm the prolonged fall in inequality since the 1980s. However, this reduction seems to have been milder than suggested by the observed Ginis and has slowed down considerably since the mid-2000s.
  5. Macroeconomic stabilisation in 1994 seems to have had an equalising effect, but top shares have not budged since due to the prevalent political status quo. Similarly, top shares declined in the late 1970s as the military regime sought legitimacy, but rose again in the 1980s when the political situation that led to the Brazilian redemocratisation resulted in spiralling inflation due to new demands, the maintenance of old privileges and massive debt accumulated during the age of import substitution industrialisation.

Read the full study here or the One Pager summary.

(*) Under supervision of Denise Marinho dos Santos, Senior Communications Officer

Language: 
English
Date: 
Wednesday, April 25, 2018 - 15:15
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