Poverty and Inequality in Brazil: The Depletion of the Distributive Effects of the Real Plan

Abstract

The persistence of absolute poverty in Brazil is associated with high levels of income inequality. For this article, this association is the departing point for presenting a schematic evolution of poverty in Brazil in the last three decades: a sharp decline in the 70's as income grew at high rates. Fluctuations of poverty incidence following the short-term economic trends in the 80's and early 90's. Finally, the reduction after the 1994 (Real Plan), which brought poverty incidence to a level where it has stabilized since 1995. This stability of poverty incidence for the country as a whole encompasses quite different local situations, for instance, improvements in the Center-West and deterioration in metropolises, specially Sao Paulo. Metropolitan labor market indicators for the last three years show us a sharp decline of the number of jobs for the least qualified workers, which has the effect of adversely affecting poverty and inequality.