Assets, markets and poverty in Brazil

This paper establishes a basis of research on the relationship between poverty, resources distribution and assets markets operation. The main objective is to help the implementation of capital enhancing policies towards the poor. The strategy followed is to analyze three different types of impacts that increasing the assets of the poor may have on social welfare. The first part of the paper evaluates the possession of different types of capital along the income distribution. This exercise can be perceived as an augmentation of income based poverty measures by incorporating the direct effect exerted by asset holdings on social welfare. The second part of the paper describes the income generating impact that asset holdings may have on poverty. It studies how the accumulation of different types of capital impact income-based poverty outcomes using logistic regressions. The third part studies the effect that increasing asset holdings of the poor has on improving poor individuals ability in dealing with adverse income shocks. This consist in studying the interaction between earnings dynamics, capital market imperfections and financial behavior taking into account different time horizons. Long-run issues are related to the study of low frequency income fluctuations and life-cycle assets holdings using cohort analysis. Short-run issues are related to assessing the poor behavior and welfare losses in dealing with high frequency gaps between income and desired consumption. The analysis earnings and poverty dynamics is conducted with panel data while qualitative data is used for the analysis of household short-run financial behavior.