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The State and income inequality in Brazil

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  • Medeiros, Marcelo
  • Souza, Pedro H.G.F.

Abstract

Using a factor decomposition of the Gini coefficient we measure the contribution to inequality of direct monetary income flows to and from the Brazilian State. The income flows from the State include public servants’ earnings, Social Security pensions, unemployment benefits and Social Assistance transfers. The income flows to the State comprise direct taxes and employees’ social security contributions. Data comes from the Brazilian POF 2008-9. The results indicate that the State contributes directly to a very large share of inequality. Factors associated to work in the public sector – wages and pensions – are very concentrated and regressive. Factors related to the private sector are still concentrated, but progressive. Contrary to what has been found in other countries, public spending with work and social policies is concentrated in the elites and, taken as a whole, tends to increase inequality. Redistributive mechanisms that could reverse this inequality, such as taxes and social assistance, are very progressive but proportionally small; consequently their effect is completely offset by the regressive income flows from the State. Por meio de uma decomposição do coeficiente de Gini mede-se a contribuição para a desigualdade dos fluxos diretos de rendimento de e para o Estado no Brasil. Os fluxos de rendimento do Estado incluem a renda dos trabalhadores no setor público, aposentadorias e pensões, seguro-desemprego e rendimentos associados e transferências da assistência social. Os fluxos de rendimento para o Estado incluem os impostos diretos e as contribuições previdenciárias. Os dados são provenientes da Pesquisa de Orçamentos Familiares (POF) 2008-9. Os resultados indicam que o Estado contribui diretamente para uma grande parcela da desigualdade. As componentes associadas ao trabalho no setor público – salários, aposentadorias e pensões – são muito concentradas e regressivas. As componentes associadas ao setor privado também são concentradas, porém progressivas.
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Suggested Citation

  • Medeiros, Marcelo & Souza, Pedro H.G.F., 2013. "The State and income inequality in Brazil," Institute for Research on Labor and Employment, Working Paper Series qt584222f0, Institute of Industrial Relations, UC Berkeley.
  • Handle: RePEc:cdl:indrel:qt584222f0
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    References listed on IDEAS

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    Cited by:

    1. Sean Higgins, Nora Lustig, Whitney Ruble, and Timothy Smeeding, 2014. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States - Working Paper 360," Working Papers 360, Center for Global Development.
    2. Branko Milanovic & Sean Higgins & Nora Lustig & Whitney Ruble & Timothy M. Smeeding, 2016. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62, pages 22-46, August.
    3. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy Smeeding, 2013. "Comparing the incidence of taxes and social spending in Brazil and the United States," Commitment to Equity (CEQ) Working Paper Series 1316, Tulane University, Department of Economics.

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