Income inequality in Brazil

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Brazil has been tackling problems of income inequality despite high rates of growth. Its GDP (gross domestic product) growth in 2010 was 7.5%[1] yet its GINI coefficient, a measure of its inequality was reported at 0.543 in 2009.[2] In the recent decades, there has been a decline in inequality for the country as a whole (Fig 1). Brazil’s GINI coefficient in 2001 (0.596) has slowly decreased to its present day 0.543. However, the numbers still point to a rather significant problem of income disparity.

The country's high income concentration is revealed in figures: the richest one per cent of the population – less than 2 million people – have 13 per cent of all household income. This percentage is similar to that of the poorest 50 per cent - about 80 million Brazilians. This inequality results in poverty levels that are inconsistent with an economy the size of that of Brazil.[3]

Figure 1 (Trend of the Gini coefficient in Brazil)  Measures the degree of inequality in the distribution of per capita household income among individuals. Its value can theoretically vary from 0, when there is inequality (the income of all individuals have the same income of the company and the income of all other individuals is null). Series calculated from the responses to the National Survey by Household Sampling (PNAD / IBGE).

Contents

Factors contributing to Brazil’s income disparity

Rural urban divide

Varying levels of economic development exists in urban and rural areas. Those living in the rural communities face a lack of proper education, healthcare and infrastructure.[4] The lack of access to technology, formal education and skills training have resulted in fewer employment opportunities, and hence contribute to lower revenues of people living in rural areas.[5]

Low levels of education

The low level of education in Brazil in general has been a concern as it perpetuates the income inequality situation by decreasing social mobility. This limits the opportunities of those in low income groups, lowering their chances of narrowing the income gap. Brazil has an illiteracy rate of 10.2% and a poor quality of education. Data from the PISA programme of the Organization for Economic Cooperation and Development (OECD) showed that Brazil ranks far behind other nations in terms of learning in various knowledge areas with the majority of their students reaching only lowest learning levels in the disciplines.[6]

Pro-rich tax system

Brazil implements a regressive tax system that which burdens the poor.[7] The tax load of those in the higher income brackets earning more than 30 times the minimum wage a month amounted to 26.3 per cent. In contrast, those with a monthly income of less than twice the minimum wage were taxed almost twice the amount at 48.8 per cent.[8]

High land ownership concentration

The expansion of an export- driven agribusiness has led to land ownership concentration (IBGE census reports a GINI index of 0.872). The government implemented an agrarian reform that has resettled many family farms, which employ about 74% of agricultural workers. However, land ownership concentration was reported to be high even in areas where family farms are settled. This is a disturbing issue with regards to income inequality as family farms find it hard to compete with large-scale producers.[9]

References

  1. ^ "Growth rates in Brazil, CIA – The world factbook". https://www.cia.gov/library/publications/the-world-factbook/geos/br.html. Retrieved 2 September 2011.
  2. ^ "Statistics on the GINI coefficient in Brazil and Figure 1, IPEA (Instituto de Pesquisa Economica Aplicada)". http://www.ipeadata.gov.br/Default.aspx. Retrieved 2 September 2011.
  3. ^ "Notes on inequality and poverty in Brazil: Current situation and challenges". http://www.oxfam.org.uk/resources/downloads/FP2P/FP2P_Brazil_Inequality_Poverty_BP_ENGLISH.pdf. Retrieved 9 September 2011.
  4. ^ "Rural poverty in Brazil". http://www.ruralpovertyportal.org/web/guest/country/home/tags/brazil. Retrieved 3 September 2011.
  5. ^ "Globalization, poverty, and social inequity in Brazil". http://www.schwartzman.org.br/simon/pdf/globalization.pdf. Retrieved 9 September 2011.
  6. ^ "Notes on inequality and poverty in Brazil: Current situation and challenges". http://www.oxfam.org.uk/resources/downloads/FP2P/FP2P_Brazil_Inequality_Poverty_BP_ENGLISH.pdf. Retrieved 9 September 2011.
  7. ^ "Brazilian tax burden leads to more inequality nationwide". http://www.infosurhoy.com/cocoon/saii/xhtml/en_GB/features/saii/features/economy/2010/02/23/feature-04. Retrieved 9 September 2011.
  8. ^ "Notes on inequality and poverty in Brazil: Current situation and challenges". http://www.oxfam.org.uk/resources/downloads/FP2P/FP2P_Brazil_Inequality_Poverty_BP_ENGLISH.pdf. Retrieved 9 September 2011.
  9. ^ "Agribusiness Driving Land Concentration". http://ipsnews.net/news.asp?idnews=48734. Retrieved 9 September 2011.