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Inequality and Economic Development in Brazil

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Abstract

This study addresses three questions : why do inequalities matter for Brazil's development? Why does Brazil occupy a position of very high inequality in the international community? And, What should public policy do about it? Excessive income inequality is unfair, and undesirable on ethical grounds, and can bring adverse effects on economic growth, health outcomes, social cohesion, and crime. Brazil's excessive income inequality is associated to regressive public transfers, less equitable distribution of education, and higher wage differentials. It is thus suggested that Brazil's strategy to fight inequality should focus on four areas that are good for reducing inequality, good for reducing poverty, and good for increasing efficiency, competitiveness, and growth: raising the level, and reducing the inequities of educational attainment, reducing the wage skill premium of post-secondary education, reallocating public expenditure away from excessive, and regressive transfers, and taking advantage of the opportunity to implement an indirect tax reform, that can reduce the inequity of indirect taxation. Despite the absence of explicit tradeoffs between equity, and efficiency, these policies do not benefit everyone, and they do involve inevitable political choices.

Suggested Citation

  • World Bank, 2004. "Inequality and Economic Development in Brazil," World Bank Publications, The World Bank, number 14913, October.
  • Handle: RePEc:wbk:wbpubs:14913
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    File URL: https://openknowledge.worldbank.org/bitstream/handle/10986/14913/301140PAPER0Inequality0Brazil.pdf?sequence=1
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    References listed on IDEAS

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    3. Marcelo Neri & José Márcio Camargo, 1999. "Distributive effects of Brazilian structural reforms," Textos para discussão 406, Department of Economics PUC-Rio (Brazil).
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    7. Fiess, Norbert M. & Verner, Dorte, 2004. "The dynamics of poverty and its determinants - the case of the Northeast of Brazil and its states," Policy Research Working Paper Series 3259, The World Bank.
    8. Robbins, Donald & Gindling, T H, 1999. "Trade Liberalization and the Relative Wages for More-Skilled Workers in Costa Rica," Review of Development Economics, Wiley Blackwell, vol. 3(2), pages 140-154, June.
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    11. Mauricio SANTAMARÍA SALAMANCA, 2001. "External Trade, Skill, Technology and the recent increase of income inequality in Colombia," Archivos de Economía 002705, Departamento Nacional de Planeación.
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    Citations

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    Cited by:

    1. Perlman, Janice E., 2007. "Globalization and the Urban Poor," WIDER Working Paper Series 076, World Institute for Development Economic Research (UNU-WIDER).
    2. Machado, Fabiana, 2011. "Does Inequality breed Altruism or Selfishness? Gauging Individuals’ Predispositions Towards Redistributive Schemes," MPRA Paper 35664, University Library of Munich, Germany.
    3. repec:asg:wpaper:1029 is not listed on IDEAS
    4. Fabio Clementi & Francesco Schettino, 2013. "Income polarization in Brazil, 2001-2011: A distributional analysis using PNAD data," Economics Bulletin, AccessEcon, vol. 33(3), pages 1796-1815.
    5. Faguet, Jean-Paul & Shami, Mahvish, 2008. "Fiscal policy and spatial inequality in Latin America and beyond," LSE Research Online Documents on Economics 27162, London School of Economics and Political Science, LSE Library.
    6. Raul M. Silveira-Neto & Carlos R. Azzoni, 2012. "Social Policy As Regional Policy: Market And Nonmarket Factors Determining Regional Inequality," Journal of Regional Science, Wiley Blackwell, vol. 52(3), pages 433-450, August.
    7. Eduardo Wiesner, 2008. "The Political Economy of Macroeconomic Policy Reform in Latin America," Books, Edward Elgar Publishing, number 12913, December.

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