Accumulated variation of extreme poverty (p.p.) 12/05/2017 ** Bolsa Família and the Economy (A Look on Final Goals) Marcelo Neri Extreme Poverty Cumulative REDISTRIBUTION Effect Accumulated variation in the incidence of extreme poverty (p.p) function only of Inequality Change - Brazil, 1992/2012 4 2 0-2 -4-6 -8 "Since 2001 there is a tendency of poverty reduction. From 2003 onwards there is a net negative effect. The effect grows in 2012 despite the stability of the Gini" -10-12 1992 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 2012 Source: microdata of PNAD/IBGE 1
Effect on Gini (%) 12/05/2017 Determinants of the Variations in the Income Distribution What is the most effective combination of policies in terms of Welfare? Bolsa Família Others Effect Social Security Labor Rural, Impact of Bolsa Família Even without taking into account the small size of the Bolsa Família, it dominates the impact of other programs and is stable 0.010 Other Incomes 0.005 0.000-0.005-0.010 Social Security -0.015-0.020 Bolsa Família 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Years Source: microdata of PNAD/IBGE 2
Which source of income explains the growth and the fall of inequality from 2002 to 2012? Deconstruction in the Changes in Income Sources of Income Fall of Gini (Social Benefit) Growth in Average Wage (Fiscal Cost) Social Benefit per Spent Fiscal R$ Relative Contribution (%) Labor 54.9 76.41 Bolsa Família 12.2 2.35 5.2 Social Security above Minimum 11.4 8.53 Social Security = Minimum Wage 9.4 10.88 Other sources of income 6.5-0.1 Benefício de Prestação Continuada () 5.4 2 2.7 Δ 100 Source: microdata from PNAD/IBGE 1.07 Every additional R$ spent with Bolsa Família impacts inequality 369% e 86% more than in Social Security and, respectively. Multiplier Effects * of social transfers on: FINAL COMSUMPTION Families 0.58 0.58 0.43 1.32 1.18 1.17 1.98 0.65 0.63 0.47 1.54 1.34 1.32 2.40 Bolsa Família Program () Continuous Cash Benefit () (SegDesem) Private sector pensions () Public servants pensions () Fundo de Garantia por Tempo de Serviço () * The multiplier effect assumes the existence of idle capacity 3
Multiplier Effects * of social transfers on Families Consumption: Effect: As we have seen in 10 years of existence of the Bolsa Família, every real spent on it impacted inequality more than any other public program. Due to Bolsa Familia s greater capacity to reach the poorest that consume most of their income, the spin provided by each real transferred through it in families consumption is higher, 2.4 against 1.34 of unemployment insurance and 0.65 of social insurance. I.e, the program brings more equality and with it growth in consumption. * The multiplier effect assumes the existence of idle capacity Multiplier Effects of social transfers on: GROSS AVAILABLE INCOME Families Wage Bonus 0.80 0.60 0.56 1.48 1.31 1.28 1.27 Wage Bonus 0.760 0.650 0.530 1.350 1.270 1.270 1.640 Bolsa Família Program () Continuous Cash Benefit () (SegDesem) Private sector pensions () Public servants pensions () Fundo de Garantia por Tempo de Serviço () 4
Multiplier Effects of social transfers on: GROSS DOMESTIC PRODUCT 0.39 0.53 0.52 1.06 1.06 1.19 1.78 Bolsa Família Program () Continuous Cash Benefit () (SegDesem) Private sector pensions () Public servants pensions () Fundo de Garantia por Tempo de Serviço () Fiscal Sustainability Targeted benefits/gdp (%) - 2007 In Brazil, the Bolsa Família and the spend, together, about 1% of GDP. In Europe, most countries spend more than that. In 2012, the american federal government disbursed U$315 billion about 2% of its GDP in these programs. Ireland France United Kingdom Netherlands Germany Malta Spain Portugal Slovenia Austria Switzerland Hungary Italy Norway Denmark Sweden Bulgaria Luxembourg Lithuania Latvia Estonia 1 0.9 0.8 0.7 0.5 0.2 0.1 0 1.8 1.7 1.6 1.4 1.3 2.2 2.6 3.3 3.2 4.4 4.1 3.9 3.7 0 1 2 3 4 5 Source: OIT. World Social Security Report 2010/11: Providing coverage in times of crisis and beyond. Genebra: OIT, 2010. 5