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The Impact of Brazil's Tax-Benefit System on Inequality and Poverty

Author

Listed:
  • Immervoll, Herwig

    (OECD)

  • Levy, Horacio

    (University of Essex)

  • Nogueira, José Ricardo

    (Universidade Federal de Pernambuco)

  • O'Donoghue, Cathal

    (National University of Ireland, Galway)

  • Siqueira, Rozane Bezerra de

    (Universidade Federal de Pernambuco)

Abstract

The Brazilian government raises taxes amounting to 35% of GDP and spends more than two thirds of this on social programmes. These shares are in pair with the OECD averages and well in excess of Latin America averages. However, while tax-benefit systems in most OECD countries reduce income disparities very significantly, the Brazilian government has been much less successful in alleviating inequality and poverty. Focussing on taxes and cash transfers, this paper investigates the impact of the government budget on the income distribution in Brazil, and evaluates its efficiency and effectiveness in reducing inequality and poverty. We present BRAHMS, a new tax-benefit microsimulation model for Brazil and illustrate its use by evaluating the impact of policy on economic inequality. It is argued that microsimulation provides a valuable analytical tool for policy makers in emerging and developing countries in particular.

Suggested Citation

  • Immervoll, Herwig & Levy, Horacio & Nogueira, José Ricardo & O'Donoghue, Cathal & Siqueira, Rozane Bezerra de, 2006. "The Impact of Brazil's Tax-Benefit System on Inequality and Poverty," IZA Discussion Papers 2114, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2114
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    References listed on IDEAS

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    More about this item

    Keywords

    microsimulation; Brazil; inequality; poverty; redistribution;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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