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Desigualdade e Bem-Estar no Brasil na Década da Estabilidade

Listed author(s):
  • Sergei Suarez Dillon Soares
  • Rafael Guerreiro Osorio

Our objective in this text is to analyze the evolution of welfare and inequality in the distribution of mercantile goods and services in Brazil from 1995 to 2005. This period was characterized by monetary stability but also by large changes in relative prices, which means that a homogeneous inflation index will not yield good welfare indicators. In this text, we build centile-specific inflation indices. To do this, we use the 2003 POF expenditure survey to estimate expenditure shares for each centile of the income distribution and the national consumer price system (SNPC) to calculate inflation for each of the goods that comprise each of these shares. We then calculate, for each centile, an average inflation index weighing the inflations for each expenditure category by the expenditure shares. We then apply these centile-specific inflation indices to each centile of the nominal income distributions from 1995 to 2005 calculated using the Pnad household surveys and with this new income distribution, we calculate purchasing power for each centile. With this new income distribution, we calculate average incomes and Gini coefficients for the distribution as a whole, we verify stochastic dominance relationships as well as Lorenz dominance, and finally, calculate Atkinson social welfare functions for inequality aversion parameters varying from 0.1 to 0.9. Our results are as follows: i) inflation during the 1995-2005 period was propoor up to centile 93 and from centile 93 onwards it was pro-rich, ii) as a consequence, the Gini coefficient fell 0.61 Gini points more than what is observed using a general price index, iii) surprisingly, average incomes deflated using centilespecific deflators differs significantly from average incomes deflated using the general IPCA price index, and iv) when centile-specific deflators are used, average income falls instead of raising slightly during the 1995-2005 period.

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Paper provided by Instituto de Pesquisa Econômica Aplicada - IPEA in its series Discussion Papers with number 1270.

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Length: 33 pages
Date of creation: Apr 2007
Handle: RePEc:ipe:ipetds:1270
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