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Andres Palacio

Andrés Palacio

Senior lecturer

Andres Palacio

What caused poverty reduction in Brazil during the 2000s: sectoral growth or public expenditures

Author

  • Andrés Palacio
  • Igor Martins

Summary, in English

We ask what caused poverty to decline in Brazil during the first decade of the 21st century. Our contribution lies in the introduction of a structural change perspective to assess the evolution of poverty by considering the sectoral impact of growth and the social policies at the federal, state and municipal level. By structural change we mean the recomposition of output and employment over time. We run a first difference model to estimate the effects of mean income per capita by sector and of disaggregated public expenditures, without any attempts to infer causality. We confirm previous findings in the literature that the service sector rather than agriculture contributes the most to the sustained poverty reduction. Strikingly, the public administration is the leading sub-sector. We also find that state and municipal expenditures in human capital contribute more to poverty reduction than federal expenditures associated with conditional cash transfer programs; investment in infrastructure does not seem to contribute to poverty reduction. In short, we conclude that the payoffs of decentralized policies associated with human capital can be seen in the short run and therefore raise the bar for politicians to maintain and care for these policies. Furthermore, the public service sector, which is one of the main employers in today´s economy, must find ways to innovate and improve productivity if poverty reduction is to be sustainable in the long run.

Department/s

  • Department of Economic History

Publishing year

2020

Language

English

Pages

1-1

Publication/Series

OASIS. Observatorio de Analisis de los Sistemas Internacionales

Issue

31

Document type

Journal article

Publisher

Universidad Externado De Colombia

Topic

  • Economic History

Keywords

  • poverty
  • Structural change
  • Decentralization
  • Social policies

Status

Published

ISBN/ISSN/Other

  • ISSN: 2346-2132