Social protection in Brazil: Impacts on poverty, inequality and growth

Working and discussion papers
June 2011
Rebecca Holmes, Jessica Hagen-Zanker and Milo Vandemoortele

Brazil is one of the richest countries in the world, with a per capita gross domestic product (GDP) of $10,427 in 2009. Growth rates increased from 1.9% to 5.1% per year from 1998 to 2008. Yet the country also has one of the highest rates of inequality in the world (the Gini coefficient is 54.2), and poverty levels are also high. Over 20% of the population - 40 million people - live under the poverty line and 7% of the population - 13 million people - are extremely poor.

Over the past two decades, however, levels of inequality and poverty have been declining steadily. Between the early 1990s and 2008, the Gini coefficient fell by 5.2 points and the percentage of households living below the poverty line halved. During this same period, notable legislative and programmatic changes were made in the economic and social policy sphere, including increasing the minimum wage and public expenditure on health, education and other social services.

At the same time, Brazil has invested significantly in social protection, and the country now has one of the best-developed systems among middle-income countries, covering approximately 25% of the population. Changes in the past two decades include adapting eligibility criteria and programme design to extend non-contributory pensions - such as the Beneficio de Prestação Continuada, a means-tested disability and old-age pension, and the Previdência Rural, an old-age pension for rural informal sector workers. Meanwhile, cash transfers have been reformed, consolidated and expanded in the form of Bolsa Família, a conditional cash transfer (CCT) targeted at extremely poor households and poor parents with children living at home, which now reaches 12.5 million families. Such changes have contributed to recent reductions in inequality and poverty. The overall cost of non-contributory cash transfers in Brazil is approximately 2.5% of GDP.