Innovations for Poverty Alleviation and Social Mobility

Marcelo Neri

Strategic Affairs (SAE/PR) and EPGE/FGV

CEDLA – University of Amsterdam

Brazil as Innovator

November, 2014

Poverty Alleviation and Social Mobility

• Broadview on Brazilian Progress: The Middle Path

• Track Record from Household Surveys (also Recent Changes) and Its Causes

- Prosperity & Equity

- Sustainability (productivity, education & risk)

- Sensibility (perceptions & protests)

• Public Policies Challenges and Lessons Learned:

- Broader Prospective Agenda

- Bolsa Família 3.0

% Population with Income Below U$ 1.25 per day PPP

Source: IPEA / SAE from PNUD

Brazil: Middle of the World

Brazilian Per Capita GDP (PPP) was 93.7% of the World GDP in 2012

Brazilian Per capita GDP PPP has grown 3.5% against 3.6% of the world between 2002 e 2012

Source: SAE from the Demographic Census/IBGE

% Population with Income Below U$ 1.25 per day PPP

A World within Brazil

Component that Explains

Proportion of Extremelly Poor

% of Total Fall (56%)

Income growth 46,7%

Inequality Fall 53,3%

Total 100%

Source: IPEA/SAE from PNAD/IBGE microdata

What explains + Social Inclusion?

Growth or + Equity?

The Middle Path

1st MDG: Extreme Poverty Line (U$S 1,25 a day PPP) fell 56% in 12 years

Brazil Main Target

2001-2013 Statistical stability last year But 50% faster than MDG in last 2 years

Vintiles of Household Income - per capita

Cu

mu

lati

ve G

row

th (

%)

Cumulative Growth Rate of Per Capita Income by Vintiles 2001-2013(%)

Changes in Income Distribution 2001 -2013

richest poorest

Soucre: IPEA/SAE from PNAD/IBGE microdata

5% 5%

Income of the 5% poorest has grown 415% faster than the 5% richest

113% 115% 112% 106% 104%

97% 94% 92%

87% 84% 82%

73% 69%

63% 58%

52% 47%

39% 33%

27%

0%

20%

40%

60%

80%

100%

120%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Determinants of the Gains in Real Per Capita Prosperity from 2001 and 2013 in annual percentage points

Shared Prosperity (2001-13) (Mean and 40% Poorest)

Other Includes Bolsa

Família

0,76 e 1,16 3,26 e 5,80

Labor

Total Effect Social Security

& BPC

0,07 e 0,82

Wages and Profits

Quantity = Participation Rate + Unemployment + Hours

Educational Bonus

0,20 e -0,39

1,73 e 3,21 0,54 e 1,05

Value of Education

2,47 e 3,86

Source: SAE from PNAD/IBGE microdata

Horizontal Inequality - Growth Rate Excluded Groups Income

Annual Growth Rate of Per Capita Household Income - 2001 to 2013

7%

6%

4%

3%

0%

5%

2%

1%

Total Northeast Rural 10 or + Residents

Blacks Head- Informal Worker

0 to 6 years of Age

Head- Domestic Servant

Head- 0 Years of

Schooling

3.3%

6.9%

5.7%

5.0%

3.8%

4.7% 4.5%

4.8%

3.7%

Inequality Within Municipalities Gini Index of Per Capita Income by Municipality - 2000

Source: Demographic Census/IBGE microdata

2000

2010

Source: Demographic Census/IBGE microdata

Inequality Within Municipalities Gini Index of Per Capita Income by Municipality - 2010

Inequality fell in 80% of the 5500 Brazilian Municipalities

In the 2000s Inequality fell in 83,3% of LACs and in 39,2% of other 91 world countries

0.535

Inequality of Per Capita Income (Gini)

Source: CPS;FGV from PNAD, PME and Census / IBGE microdata and Langoni (1973)

0.581

0.589

0.607

0.592

0.560

0.543

0.523

1960 1970 1979 1990 2001 2007 2009 2013

Year

Ineq

ual

ity

(Gin

i)

0,5

0,48

0,52

0,54

0,56

0,58

6

62

Long Run Perspective Latin America Latina last 3 Decades

Falling inequality in Brazil but still the 18th

highest in 155 countries

Is Inequality Still Falling ?

Cornia (2014) on CEDLAS & CEPAL data for 11 countries with complete data for 2008-12, i.e.: Argentina, Bolivia, Brazil, Colombia, CostaRica, Ecuador, El Salvador, Mexico, Panama, Peru and Uruguay. The dotted line includes Uruguay (which recorded a higher-than-average Gini drop over 2008-12. The solid lines excludes it.

2011 0,5272

2012 0,5243#

2013 0,5229#

Brazilian Gini is now stable?

And in Latin America?

Source: PNAD/IBGE microdata # Not a statistically significant change with respect to 2011

GINI of Per Capita Labor Income*

0.62

0.60

0.58

2003 2004 2014 (Jun.)

2002 (Mar.)

0.64

0.54 2005 2006 2007 2008 2009 2010 2011 2012

0.56

2013

Income Inequality

Inequality Index, March 2002 to July 2014 (October 2014)

Has labor income inequality stopped falling?

Source: IPEA/SAE from PME/IBGE (2002-2014) microdata *the table only covers SP, RJ, BH and Recife

*Per Capita Household Labor Income - 15 to 65 Years

Between 2011 and 2013 had a slower pace but reaccelerates after

October 14 - 0,5442

GDP X Mean Income PNAD

180

160

140

120

2004 2005 2007 2012 2003

200

100 2006 2008 2009 2010 2011 2013

Real Per Capita 2003 = 100

Source: SAE from PNAD/IBGE microdata and National Accounting/IBGE

Prosperity Equality

Real differences are explained by the use of different deflators, in nominal terms mean growth rates are similar. Same Story in 2013.

X Median Income PNAD X 10% Ritchest

127.8

151.7

178.4

129.6

157.0

186.8

How much did it grow?

Renda Média PNAD

Renda Mediana PNAD

PIB per Capita

Welfare

10%+ 136.0 140.0

The New Decade – HH Per Capita Income Growth by Quintiles

20% - 20%

a 40 %

40% a 60%

60% a

80% 20% + TOTAL

2012-2013

1,37 4,41 4,44 3,94 3,11 3,48

2011-2012

11,6 9,11 8,35 7,16 7,26 7,66

2011-2013

6,37 6,73 6,38 5,54 5,17 5,55

2001-2013

6,41 5,77 5,06 3,96 2,36 3,3

Ranking Latin America

Annual Growth 2003-12

Per Capita HH Income

1 Argentina 5,50%

2 Colombia 4,68%

3 Brasil 4,60%

4 Perú 4,56%

5 Uruguay 4,42%

6 Bolivia* 3,96%

7 Ecuador 3,79%

8 Panamá 2,77%

9 Paraguay 2,74%

10 Costa Rica 2,72%

11 Chile* 2,48%

12 México 1,08%

13 El Salvador 1,03%

14 Hondura 0,94%

15Rep. Dominicana -0,87%

16 Nicaragua* -1,52%

17 Guatemala* -1,84%

Source: CEDLAS microdata

* Little Different Periods

Source: PNAD/IBGE microdata

Growth

Cunnulative Growth Rate by Percentiles – Quantile Regression

2010 • 2013 • 2014

Source: IPEA/SAE from PME/IBGE (2002-2014) microdata *the table only covers SP, RJ, BH and Recife

*Per Capita Household Labor Income - 15 to 65 Years

10%

25% 95% 5%

20%

0% 35% 45% 55% 65% 75% 85%

5%

15%

15%

13.7%

17.8%

12.0%

14.7%

8.0%

9.0%

12 months PME

Real Per Capita Income Growth

Mean

Median

Source: SAE from PME/IBGE microdata (2002-2014)

*Per Capita Household Labor Income – 15 to 65 Years No Income Imputation

Au

g- 1

4

Jan

- 1

4

Sep

- 1

3

May

- 1

3

May

- 1

4

Au

g- 1

4

Jan

- 1

4

Sep

- 1

3

May

- 1

3

May

- 1

4

Jan

- 1

3

Jan

- 1

3

-0.5

4%

4.7

%

3.4

3%

0.8

8%

3.1

3%

4.3

1%

3.0

3%

1.2

8%

2

.42

% 3

.41

%

1.8

3%

1.9

2%

3.6

3%

6.1

%

4.6

5%

4.3

5%

2

.28

%

6.8

0%

5.7

%

3.6

1%

6

.95

%

7.2

7%

6.8

0%

6.4

3%

5.0

5%

3

.88

%

4,2

6%

3,6

4%

Oct

ob

er1

4

Oct

ob

er1

4

Will November 2014 be “Dilma’s Real”?

Risk of Falling X Opportunity to Rise Across the Median

2004/ 2005

2012/ 2013

2002/ 2003

2003/ 2004

2005/ 2006

2006/ 2007

2007/ 2008

2008/ 2009

2009/ 2010

2010/ 2011

2011/ 2012

Source: IPEA/SAE from PME/IBGE longitudinal microdata

Idiossincratic Risk of Per Capita Labor Income

The risk of crossing the median in an upward direction has never been so high: 27% of the people who were below the median crossed it in 2012/2013 – inversion of the risks of falling/rising 10 years later

30

25

15

10

5

20

16

.01

26

.24

18

.81

17

.03

16

.42

16

.80

17

.79

14

.41

17

.58

12

.73

13

.69

20

.12

19

.45

13

.71

13

.31

13

.19

13

.79

13

.57

23

.10

24

.86

26

.34

27

.13

New Middle Class: Evolution of Economic Classes Pyramid 2003 - 2013

Classes A to E

2003 2009 2013

Classe C

Classes DE

Classes AB

Fonte: CPS/FGV e SAE/PR a partir dos microdados da PNAD/IBGE

54.249.506

118.992.329

29.526.727

98.8 Mil 75 Mil 62 Mil

67.8 Mil

97.8 Mil 112.5 Mil

13.8 Mil 20.7 Mil 26.3 Mil

C Class INCREASED

44.7

Mi

AB Classes INCREASED

12.5

Mi

More 4,3 mi in ABC classes in 2013 and plus 10 mi in 2012 and 2014

Evolution of ABC Classes

% Classe ABC 1993

13.01 - 28.32

28.32 - 43.63

43.63 - 58.93

58.93 - 74.24

74.24 - 89.55

1993

% Classe ABC 2003

13.01 - 28.32

28.32 - 43.63

43.63 - 58.93

58.93 - 74.24

74.24 - 89.55

2003

% Classe ABC 2009

13.01 - 28.32

28.32 - 43.63

43.63 - 58.93

58.93 - 74.24

74.24 - 89.55

2009

% Classe ABC 1995

13.01 - 28.32

28.32 - 43.63

43.63 - 58.93

58.93 - 74.24

74.24 - 89.55

1995

% Classe ABC 2014

13.01 - 28.32

28.32 - 43.63

43.63 - 58.93

58.93 - 74.24

74.24 - 89.55

2014 (forecast)

Source: Ipea from PNAD/IBGE microdata

Log (share of middle class)= 16.9 - 3.2 Log(alienation) R2=0.97 (28.5) (-23.3)

AB = Traditional Middle Class; C = New Middle Class

2013 has the Lowest Alienation and Polarization levels in PNAD series

1st Acquisition of Goods and Services

*only takes into account the ones who adquired the good or service in the last 3 years

33.61% 35.29% 37.21% 38.88%

46.19% 47.67% 49.49%

64.57% 65.48%

74.80%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1st time acquiring goods or services: Among those who purchased it in the last 3 years

Source: SAE designed questions in SECOM – Quarterly Public Perception Poll – July/2014

Equality Looking at the distribution among

individuals and social groups of

income flows, stocks of assets and

rights.

Sustainability (Assets)

Ability to maintain the standards of living

achieved. Stocks of human,

environmental, physical , cultural

and social assets.

Prosperity (Growth)

Growth in mean income and

consumption (not only GDP/National

Accounts but also look to

Household Surveys data and PIT).

Sensibility (Perceptions)

The last dimension is subjective, based on

people’s perception about the country,

the public services and life quality.

Inclusive Development?: Interactions

Growth Gaps Between 2003 and 2013

In Real Terms Cummulative

Growth

Annual

Growth

HH Income per capita (PNAD) 58.4% 4.7%

GDP per capita 32.1% 2.8%

Gap 1 26.3% 1.9%

Labor Cost (PNAD) 46.0% 3.9%

Labor Productivity (GDP per Worker) 21.1% 1.9%

Gap 2 24.9% 2.0%

Nota: Renda deflacionada com IPCA; PIB com deflator implícito do PIB.

Fonte: Pesquisa Nacional por Amostra de Domicílios (PNAD/IBGE); Sistema de Contas Nacionais (SCN/IBGE).

Sustainability

85

90

95

100

105

110

115

120

125

130

135

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

1995 - 2013

Labor Cost (Income) and Labor Productivity (GDP per Worker)

19

95

=10

0

Produtividade do Trabalho

Labor Cost (Income)

Sources: Pesquisa Nacional por Amostra de Domicílios (PNAD e IPCA/IBGE); Sistema de Contas Nacionais (SCN/IBGE).

Labor Productivity

25

70

140

280

560

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

19

95

=10

0, E

scal

a Lo

g

Nominal Labor Cost (Income)

Nominal Labor Productivity

Source: PIB nominal/ocupados (PIB nominal, SCN; ocupados, PNAD); Remuneração do trabalho/ocupado. (PNAD/IBGE).

Gap Between Labor Cost (Income) and Labor Productivity

(GDP per Worker) in Nominal Terms 1995-2013

Human Development Index by Municipality 2000 - IPEA/FJP/PNUD

Source: Ipea/PNUD/FJP from Demographic Census/IBGE 2010 microdata.

HDI 2000

0,800 a 1

0,700 a 0,799

0,600 a 0,699

0,500 a 0,599

0,000 a 0,499

In 2000, 41% of the municipalities presented very low HDI

Human Development Index by Municipality 2010 - IPEA/FJP/PNUD

Source: Ipea/PNUD/FJP from Demographic Census/IBGE 2010 microdata.

HDI 2010

0,800 a 1

0,700 a 0,799

0,600 a 0,699

0,500 a 0,599

0,000 a 0,499

In 2010, 0.6% of the municipalities presented very low HDI

HDI 2000

Fonte: SAE/IPEA, PNUD, FJP a partir dos microdados do Censo Demográfico/IBGE

The Great Rio de Janeiro

HDI 2010

Fonte: SAE/IPEA, PNUD, FJP a partir dos microdados do Censo Demográfico/IBGE

The Great Rio de Janeiro

Grade in Maths in PISA/OECD (2003) Mathematics Profficiency

356

0

100

200

300

400

500

600

Ho

ng

Ko

ng

Fi

nlâ

nd

ia

Co

réia

H

ola

nd

a Li

ech

ten

stei

n

Jap

ão

Can

adá

Bél

gica

Su

íça

Mac

ao

Au

strá

lia

No

va Z

elân

dia

R

epú

blic

a Tc

hec

a Is

lân

dia

D

inam

arca

Fr

ança

Su

écia

Á

ust

ria

Irla

nd

a A

lem

anh

a R

epú

blic

a Es

lova

ca

No

rue

ga

Luxe

mb

urg

o

Hu

ngr

ia

Po

lôn

ia

Esp

anh

a Es

tad

os

Un

ido

s Lá

tvia

R

úss

ia

Itál

ia

Po

rtu

gal

Gré

cia

Sérv

ia

Turq

uia

U

rugu

ai

Tailâ

nd

ia

Méx

ico

In

do

né

sia

Tun

ísia

B

RA

SIL

Source: Pisa/OECD.

Improvement in Maths in PISA/OECD (2003-2012) Mathematics Profficiency

35

- 40

- 30

- 20

- 10

0

10

20

30

40

BR

ASI

L Tu

nís

ia

Méx

ico

P

olô

nia

Tu

rqu

ia

Po

rtu

gal

Itál

ia

Ind

on

ési

a R

úss

ia

Sérv

ia

Co

réia

H

on

g K

on

g

Mac

ao

Ale

man

ha

Tailâ

nd

ia

Gré

cia

Látv

ia

Suíç

a Ja

pão

A

ust

rália

Es

pan

ha

Liec

hte

nst

ein

Ir

lan

da

Esta

do

s U

nid

os

Luxe

mb

urg

o

No

rue

ga

Uru

guai

H

un

gria

C

anad

á D

inam

arca

B

élgi

ca

Ho

lan

da

Fran

ça

Rep

úb

lica

Eslo

vaca

R

epú

blic

a Tc

hec

a A

ust

rália

Is

lân

dia

N

ova

Zel

ând

ia

Fin

lân

dia

Su

écia

Source: Pisa/OECD.

60

50

20

10

93 94 95 98 99 00 01 2012 1992

70

0 96 97 02 03 04 05 06 07 08 09 10 11

40

30

Covarage of Basic Goods and Services

Conditions in Houses improved than public services out

Gro

wth

(%

) Pop. with basic set of durable goods X Pop. with basic set of public services

11.06

28.23

44.43

46.60

40.58

51.14

58.26

59.23

+

Notes:

* = telephone (landline or mobile), color TV, stove with two burners or +, refrigerator, radio and washing machine ** = electricity, garbage collection, sewage (rede ou fossa ligada à rede), water (rede). Source: Ipea/SAE from Pnad/IBGE microdata. Excluding rural areas of the North region (except Tocantins).

Sustainability

Source: IPEA 2013 microdata

Variables / Participation Participated

Didn’t

participate but

wanted to

Dind’t

participate,

didn’t want to,

but approves

Disapproves

Average Age 31 37 46 50

Men 49% 37% 34% 32%

Until 4th grade completed 4% 18% 31% 45%

Incomplete or Complete

Tertiary Education 26% 16% 8% 5%

Receives Bolsa Família 19% 19% 24% 27%

Household Head Income R$ R$ 1,464 R$ 1,382 R$ 1,104 R$ 871

Total Household Income R$ R$ 2,836 R$ 2,544 R$ 1,802 R$ 1,722

Demonstrations June 2013 Profile of Protesters

Sensibility

Variables Coefficient p-value Odds Ratio

1 Internet as Main Source Information 0.9893 <.0001 2.69

2 Northeast -0.736 <.0001 0.48

3 Head or Spouse -0.4172 0.0015 0.66

4 Work 0.2441 0.009 1.28

5 Incomes of the poorest improved + 0.3431 0.0001 1.41

6 Delay in Public Services Bill 0.2371 0.009 1.27

7 15-29 years 0.7224 <.0001 2.06

8 30-59 years 0.3755 0.0019 1.46

9 Is against Bolsa Familia 0.2638 0.0124 1.30

10 Has Private Health Insurance 0.192 0.0404 1.21

11 Confederations Cup City Host 0.443 0.0027 1.56

12 Central-West -0.4422 0.0555 0.64

13 Uses bus + than 3 times a week 0.2249 0.0464 1.25

Participation on the 2013 Demonstrations

Order of Importance of Explanatory Variables: Stepwise Multinomial Ordered Logit Model

Source: IPEA 2013 microdata

Source: microdata IPEA, 2013, 2014.

Demonstrations Future Life Satisfaction and Demonstrations

Variables / Participation Participated Didn’t participate

but wanted to

Dind’t participate,

didn’t want to, but

approves

Disapproves

Happiness in 5 Years

(April 2013) 8,19 8,54 8,42 8,21

Happiness in 5 Years

(August 2013) 8,69 8,49 8,26 7,75

Difference 0,51 -0,05 -0,16 -0,46

Variables / Participation Participated Didn’t participate

but wanted to

Dind’t participate,

didn’t want to, but

approves

Disapproves

Happiness in 5 Years

(August 2013) 8,69 8,49 8,26 7,75

Happiness in 5 Years

(May 2014) 8,17 8,16 8,37 8,36

Difference - 0,52 - 0,33 0,11 0,61

Felicidade Futura ( 2015)

2.8 - 4

4 - 5.19

5.19 - 6.39

6.39 - 7.58

7.58 - 8.78

No Data

Source: Gallup World Poll microdata

Future Happiness Life Satisfaction in 5 years – 2015

Brazil had the highest expected life satisfaction: 8.64 on a 0 to 10 scale

2013 2012 2011 2010 2009 2008 2007 2006 Total Mean

Brasil 8,8 1 8,72 1 8,81 1 8,64 1 8,66 1 8,68 1 8,44 1 8,78 1 8,69

Brazil is nine consecutive times the first in the World ranking of Future Happiness 5 years ahead

The Country of the Future?

Nation 6.8

Source : IPEA 2013

Geography of Happiness Satisfaction in 5 Years

2018 as seen from 2013

0 – 4

4 – 5.19

5.19 – 6.39

6.39 – 7.58

7.58 or more

0 – 4

4 – 5.19

5.19 – 6.39

6.39 – 7.58

7.58 or more

Individual 8.46

• Macro: Productivity and Savings

• Meso: Quality of Regular and Technical Education

• Population : Immigration, Youth (Aspirations) and Early Childhood

• Other Areas of SAE: Cybernetic Security and Climate Adaptation

• Integrated Policies : Poor, Vulnerable and New Middle Class

Quite a Few Challenges: SAE Agenda

Bolsa Familia 3.0 The Next Generation of Conditional Cash Transfers (CCTs)

Outline • Results (ends)

• Channels (means)

• Upgrades

Happiness: Social Transfers and Changes in Life Satisfaction

Past X Present Happiness

Total Social Security Unemployment Insurance Bolsa Família

1

0

2

3

6

10

4

5

9

8

7

5.96 6.25

5.41 5.28

7.04 6.99 6.19

6.86

“The Bolsa Família beneficiaries were those with lowest grade of past happiness (5 years before), reflecting the higher poverty among the program beneficiaries”

“Present happiness is closer between beneficiaries and non-beneficiaries” Source: IPEA October 2012

Bolsa Família beneficiaries had the biggest jump 29.9% vs. 18.1% of the total population leading to more equity in present life satisfaction”

“Comparing similar people Bolsa Família is associated with gains in present life satisfaction of 0.41 points compared to past life satisfaction*.” *Vis a vis non-beneficiaries, does not imply causality

Sensibility

0.00

0.20

0.40

0.60

0.80

1.00

0.00 1.00

Cu

mu

lati

ve In

com

e

Cumulative Population

Labor Social Security Other Incomes

BPC Bolsa Família Total per capita Income Source: SAE from microdata of PNAD/IBGE

BPC Poverty

Other incomes

Bolsa Família

Labor

Social Security

Total per capita Income

Equality Bolsa Família Impact on Income Inequality

The concentration curve of the Bolsa Família differs from other sources of income = Each R$ generates more Equality

Bolsa Familia covers 25% of Brazilian Population at a cost of 0,5% of GDP Without Bolsa Familia Extreme Poverty would rise 36%

Contribution of Income Sources to Growth by Income Groups in annual percentage points.

Which source of income (program) contributed the most to growth?

2001 - 2012 2001-12 Mean 40% Poorest 5% Richest 10% Poorest

Labor 2.75 4.27 1.99 2.97

Bolsa Família 0.10 0.83 0.00 3.29

BPC 0.06 0.28 -0.06 0.16 Social

Security 0.74 0.89 0.32 0.23

Other 0.00 0.11 -0.02 0.14

Total 3.64 6.38 2.23 6.80 At this growth pace, it would take 31,5 years at this rate for the 5% richest to double its income against 10,5 years for the 10% poorest.

Source: SAE from PNAD/IBGE microdata

Leaks

Government

Income from

Factors

Indirect Effects

Imports of goods and services

Indirect Taxes

Direct Effect

Direct Taxes

Social Accounting Matrix and (MCS) the Circular Flow of Income obtained with the expansion of a cash transfer

Production

Family income

Transfer Capital

Account

Rest of the World

Prosperity

Source: Neri, Vaz e Ferreira (2013) from SAM 2009

Bolsa Família Program (BFP)

Continuous Cash Benefit (BPC)

Unemployment Insurance (SegDesem)

Wage bonus

Private sector pensions (RGPS)

Public servants’ pensions (RPPS)

Severance Fund Formal Employment (FGTS)

Prosperity

GROSS DOMESTIC PRODUCT

Multipliers

1.78

1.19

1.06

1.06

0.53

0.52

0.39

Bolsa Familia

BPC

Unemployment Insurance

Wage bonus

Public Pensions

Social Security

FGTS

0 1.70

Total

Multiplier Effects of social transfers on:

Conservative Estimates: And there is also Impact of Liquidity - Ribas (2014)

Bolsa Família Channels to Overcome Poverty (Means Approach)

OVERCOMING POVERTY

PRODUCTIVE INCLUSION

INTERNAL

INFRASTRUCTURE (HOUSEHOLD)

CONDITIONALITIES DEMAND FOR

EDUCATION AND HEALTH

MONETARY TRANSFERS

CASH IN THE HAND OF MOTHERS

CONSUMER PROTECTION,

FINANCIAL EDUCATION

CREDIT, INSURANCE

AND SAVINGS

INCOME GENERATION Productivity

EXTERNAL

INFRASTRUCTURE

CISTERNS

TRANSPORTATION

HEALTH SCHOOLS

(EARLY CHILDHOOD)

LEVERAGE OPPORTUNITIES AND

SMOOTH SHOCKS Decent Markets

DIRECT EFFECT

WELL-BEING

DIRECT EFFECT

FAMILY BUDGET

Microcredit & Vocational Education

SUPPLY OF PUBLIC SERVICES

HOUSING

SEWAGE

Permanent Income

10

Per

cap

ita

fam

ily In

com

e (U

$)

15 5 0

Population

Benefits variable across families: Poorer get higher benefits

Poverty Gap

Poverty Line

Extreme Poverty Line BF US$ 1,25 PPP day

US$ 2 PPP day

Permanent Income Estimate: using Administrative Records (CadÚnico) info: Education all HH members, Housing & Public Services coverage, other benefits etc...

Identifies who is chronically poor, and not who says is poor

Complementation

Inovation on Payment Systems

• Social Federalism: Role of the States and City

Complements to Federal Bolsa Família:

Children and Youth (Add Forces & Divide Labor to Multiply Results and to

Make a Difference) – How to engage poorer States?

• To broaden the scope of actions it is natural to use the framework of low

formal earnings subsidies (Abono Salarial between 1 and 2 minimum

wages) and transition rules such as those in RMI (Revenu minimum

d’insertion)

• Use of International References (MDGs) (*1,25 & 2 U$S a day) - Poverty Line

and Elegibility Criteria?

• Completes Income towards the Poverty Line (Uni or Multidimensional?)

• Estimated Permanent Income (Middle path).

`• Mothers Key Delivery Role & Active Search of Students Without Mother

The Life Cycle of Poverty

0

2

4

6

8

10

12

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80

Without Bolsa Família With Bolsa Família from 2011

Source: V National Report on the Millennium Development Goals.

Without Bolsa Familia Extreme Poverty would rise 36%

Inovations in Conditionalities:

• Incentives to Students Performance

- Profficiency Performance Premium Primary Education

- Youth Savings Incentive Mechanisms

- Alignment Incentives (Teachers, Parents & Students)

• Parents Engagement (School Meetings on Saturdays)

• Early Childhood Education (Supply: Poor Kids are First in Line)

Constructs on top of Bolsa Família & Local Social Services structures

Communication Gross Motor Fine Motor Problem Solving Personal-Social Scale

510 milestones

Monitoring child development in Rio Impact of Daycare on

Mothers Labor Earnings (R$ 181 monthly)

Deep Transformation?

• The Middle Path: Poverty=Inequality Reduction+Growth;

• Prosperity : Increase in Household income exceeds GDP

• Equity Is Inequality still falling? Growth For Everyone (PIT too?) Housing Issues?

• Sustainability Structural Labor Ingredients – Improvement in HDI

(multidimensional inequality sensitive indicators change +). Quality of education (Bad Picture, Good Movie)

• Sensibility: Protests, the Paradox of Polarization, the Political

Economy of Inequality Fall

The Brazil of household surveys has been improving more than the Brazil of National Accounts Confirmation bias deriving from macroeconomic challenges

Map of Public Use Database Household Surveys Microdata Administrative Records

PNAD (100,000 housedholds per year) National Accounts IBGE (Hybrid)

Annual Cross-section (1976 -2012); IBGE

Incomes, Residential Capital PIT Personal Income Tax

POF (48,000 families per year) 1974; 2002; 2008 25 million individuals; 2007 -2012

Details: Incomes, Spending and Taxes Unified Register for Social

Programs – CadÚnico (60 milhões) MDS

Mapping Mapping

CENSUS (18 million individuals) 1960 - 2010 RAIS - Registro Anual de Informações Sociais (Annual

Register of Social Information)

IBGE, Long Run Income and Special Detailed Maps Formal Employment, Ministry of Labor and Employment ((MTE)

Monitoring Maping and Monitoring

PME (36 mil dwellings month) 1980-2014, IBGE

Monthly Labor with a two month lag, 6 Metrocities, CAGED Formal Employment MTE

Monthly with a two month lag

Brazil Social: References & Links (Marcelo Neri)

Shared Prosperity: http://www.compaso.com.br/docs/PP_SharedProsperity_Final_PNAD2013.pdf

Middle Class: Portuguese: http://issuu.com/sae.pr/docs/classem__dia_ebook English: http://www.compaso.com.br/docs/NCM_Neri_Sae_MiddleClass_ENG_PNAD2013.pdf http://www.cps.fgv.br/cps/livroncm/ & http://www.sae.gov.br/site/?p=22297

Social Tensions: http://www.compaso.com.br/docs/Social_tension_final.pdf

Pro Poor Growth: http://www.cps.fgv.br/cps/pesquisas/Politicas_sociais_alunos/2011/pdf/5PP_KakwaniNeriSonsdarticle.pdf

Income Policies: http://www.fgv.br/cps/docs/acad/BF_Livro_Scanner.pdf

Deprivation: http://www.compaso.com.br/docs/PP_inequality_relative_deprivation_and_social_class_Final.pdf

Social Transformations (portuguese – recent study) www.compaso.com.br/docs/Neri_TransformacoesSociaisAteJulho2014.pdf

Bolsa Família Book Executive Summary: http://www.ipea.gov.br/portal/images/stories/PDFs/140321_pbf_sumex_ingles.pdf http://www.sae.gov.br/site/?p=22181

World Without Poverty https://www.wwp.org.br/en

Human Development Map - Data Brazilian Cities http://www.atlasbrasil.org.br/2013/en/

Report on MDGs http://www.sae.gov.br/site/?p=23258

Social Targets: http://www.cps.fgv.br/cps/pesquisas/Politicas_sociais_alunos/2010/20100512/PDF/BES_MetasSociais_NeriXerez_Teoria.pdf

BRICS: http://www.ipea.gov.br/forumbrics/en/

Brazilian Microdata & Data http://www.econ.puc-rio.br/datazoom/ www.ibge.gov.br http://www.ipeadata.gov.br/

Thank you!

Brasil Social: Links & Referências (Marcelo Neri)

Shared Prosperity: http://www.compaso.com.br/docs/PP_SharedProsperity_Final_PNAD2013.pdf

Classe Média: Português: http://issuu.com/sae.pr/docs/classem__dia_ebook Inglês: http://www.compaso.com.br/docs/NCM_Neri_Sae_MiddleClass_ENG_PNAD2013.pdf http://www.cps.fgv.br/cps/livroncm/ & http://www.sae.gov.br/site/?p=22297

Transformações Sociais www.compaso.com.br/docs/Neri_TransformacoesSociaisAteJulho2014.pdf

Educação Profissional http://issuu.com/sae.pr/docs/ebook_educa____o Social Tensions: http://www.compaso.com.br/docs/Social_tension_final.pdf

Pro Poor Growth: http://www.cps.fgv.br/cps/pesquisas/Politicas_sociais_alunos/2011/pdf/5PP_KakwaniNeriSonsdarticle.pdf

Income Policies: http://www.fgv.br/cps/docs/acad/BF_Livro_Scanner.pdf

Deprivation: http://www.compaso.com.br/docs/PP_inequality_relative_deprivation_and_social_class_Final.pdf

Bolsa Família Livro: http://www.ipea.gov.br/portal/images/stories/PDFs/livros/livros/livro_bolsafamilia_10anos.pdf Sumário Executivo: http://www.ipea.gov.br/portal/images/stories/PDFs/140321_pbf_sumex_portugues.pdf http://www.sae.gov.br/site/?p=22177

Mundo Sem Pobreza - WWP https://www.wwp.org.br/

Atlas do Desenvolvimento Humano Municipal http://www.atlasbrasil.org.br/2013/

Relatório ODMs http://www.sae.gov.br/site/?p=23262

Metas Sociais: http://www.cps.fgv.br/cps/pesquisas/Politicas_sociais_alunos/2010/20100512/PDF/BES_MetasSociais_NeriXerez_Teoria.pdf

BRICS: http://www.ipea.gov.br/forumbrics/pt-BR/

Microdados & Dados Brasileiros http://www.econ.puc-rio.br/datazoom/ www.ibge.gov.br http://www.ipeadata.gov.br/

Obrigado!