Principal investigator: Angelo Cruz do Nascimento Varella
Article title: The Effectiveness of Income Transfers: Trends in Inequality Before and After the Bolsa Família Program
Article authors: Carlos Rosano Peña; Danielle Sandi Pinheiro; Pedro HM Albuquerque; Loyane Mota Fernandes;
Location of the intervention: Brazil
Sample size: Average household income per capita by tenths of the population, of the 27 Brazilian states, between 1999 and 2009
Main theme: Economic Policy and Governance
Primary variable of interest: poverty reduction
Type of Intervention: Analysis of the effects of the Bolsa Família Program on poverty reduction based on data collected from the PNAD (National Household Sample Survey), between 1999 and 2009.
Evaluation method: Differences in Differences
The Problem of Politics
Brazil is an emerging country with high levels of poverty and socioeconomic inequality. In 2013, the Institute for Applied Economic Research (IPEA) indicated that the income appropriated by the richest 1% of the Brazilian population was about 17 times greater than the income of the poorest 40%, demonstrating a strong concentration of financial resources observed in all regions of the country.
Poverty, income concentration, and regional inequality are structural problems in Brazil that have deepened with national economic expansion. Several factors, such as low levels of education, insufficient and poor-quality public services, corruption, high tax burdens, and inequalities of opportunity, exacerbate this scenario of discrepancies and reproduce a vicious cycle of poverty in Brazil, in which individuals belonging to the poorest classes are unable to improve their income levels and social mobility is hampered.
These effects negatively impact Brazilian economic development. According to researchers, traditional public policies adopted in the country mistakenly prioritized economic growth as the main factor for inclusive development for decades. However, from the end of the 20th century onwards, Brazil began to adopt public policies of income redistribution, in order to mitigate the effects of inequality and reduce the harms stemming from poverty and misery.
The Implementation and Evaluation Context
At the turn of the 20th century, public policies for income redistribution and aid against poverty and extreme poverty emerged in Brazil as a solution to the problems of socioeconomic inequality. Public policies such as the Child Labor Eradication Program, Bolsa Escola (School Grant), Bolsa Alimentação (Food Grant), among others, aimed to reduce poverty in the short term and prevent new generations from remaining victims of social inequality. Each of these benefits required reciprocal obligations from the beneficiary families, such as prenatal exams for pregnant women, breastfeeding, childhood vaccination, and school attendance above 85% for children between 6 and 15 years old.
In 2003, the then Ministry of Social Development and Fight against Hunger (MDS) unified federal income transfer programs into the Bolsa Família Program (PBF), whose main objective was to integrate federal aid granted to families in poverty according to the number of children and adolescents in the family unit. Thus, the aim was to centralize and optimize federal management, improving the execution of assistance programs while maintaining the logic of counterpart contributions from families and the implementation of monitoring and follow-up systems.
During its first decade of implementation, the Bolsa Família Program (PBF) was considerably expanded. Between 2003 and 2012, the program's budget increased from 3,2 billion reais to serve 3,6 million families, to a total of 20,2 billion reais, serving 13,7 million Brazilian households. Consequently, the program became widely debated, with one of the main questions concerning the PBF's ability to combat poverty and reduce social inequality.
Policy/Program Details
According to the MDS, the PBF considered individuals in extreme poverty when their family income... per capita The family income was less than R$70 per month. Conversely, individuals were considered to be living in poverty if their per capita family income was between R$70 and R$140 per month. Depending on the number of children, whether children or adolescents, the benefits ranged from R$32 to R$306 per month. Any family that met these criteria was entitled to the benefit, and every two years the registrations are reviewed to verify compliance with the eligibility conditions. It should be noted that families eligible to participate in the program but who had difficulty meeting the necessary requirements received assistance from the government to help them return to the established conditions.
In order to investigate the unfolding of the implementation of the Bolsa Família Program (PBF) and measure its effects on combating poverty in Brazil, researchers used the IPEADATA database from the Institute for Applied Economic Research (IPEA), which refers to the income proportions of the Brazilian population according to household income. This specific database is created from the National Household Sample Survey (PNAD), conducted by the Brazilian Institute of Geography and Statistics (IBGE), and divides the Brazilian population into 10 classes, which describe the proportion of total income appropriated by each class, according to its household income. per capitaThis classification can be seen in the following table for the period between 1999 and 2009.
Table 01 – Proportion of the country's total income appropriated by the top 10 tenths of the population according to per capita household income
The Assessment Method
Based on the collected data, the researchers divided the database into two periods. The first, comprising the years 1999 to 2003, represents the period before the implementation of the Bolsa Família Program (PBF). The second, comprising the years 2005 to 2009, represents the period after the program's implementation. Thus, by comparing both periods, it is possible to measure the probability of an individual belonging to one of these classes increasing or decreasing their income level, transitioning or not between classes. In other words, if it is possible to identify the transition between the proportions of the lower classes to the higher classes, starting from the implementation of the PBF, it is feasible to argue that the program directly impacted the fight against poverty and extreme poverty.
Furthermore, by comparing the same phenomenon of income class transition in the period before and after the implementation of the Bolsa Família Program (PBF), it is possible to compare the efficiency of the unified program with the model composed of several parallel federal aid programs. To this end, the researchers use two methods common to public policy analyses, in order to ensure the veracity of the results.
Main results
The results are divided into two parts:
- Before the Bolsa Família Program
The results indicate that income transfer policies prior to the Bolsa Família program were insufficient to improve the income conditions of individuals belonging to the poorest classes. Even in the long-term case, in which the simulation indicated slightly positive transitions from lower to higher classes, the estimated period for the change to occur was equivalent to hundreds of years. In other words, the probabilities of improvements in the socioeconomic conditions of the lower income classes were minimal and did not demonstrate beneficial patterns of social mobility. For the lowest income class, for example, the chances of remaining in the same social class were 93%, with only a 7% chance of moving up to the second lowest class.
2. After the Bolsa Família Program
After the program's implementation, the results obtained point to a better situation, more conducive to social mobility. The probabilities associated with remaining in the lower classes decreased after the Bolsa Família program, such that in the poorest class, the probability of moving up to the next higher class was 67%. In the second lowest class, the probability of moving up to the next higher class was 48%. Even the equilibrium period was reduced from hundreds of years to six decades. In other words, the results obtained with the implementation of the program were considerably more positive and presented better conditions for social mobility and a reduction in poverty and extreme poverty levels in the country.
- Lessons in Public Policy
Based on the study, it is possible to affirm that the implementation of the Bolsa Família Program had a positive impact on combating social inequality, allowing the poorest segments of society to obtain better conditions for social mobility, reducing poverty and extreme poverty levels in Brazil. These results indicate that the unification of previous income transfer programs into the Bolsa Família Program was beneficial to Brazilian society, such that the evolution and increased scope of the program had positive impacts in the pursuit of breaking the "cycle of poverty".
Therefore, it is possible to affirm that expanding the scope and benefits of the program has the potential to reduce the negative impacts of poverty and extreme poverty in Brazil, reducing socioeconomic inequalities and mitigating the dynamics of the cycle of social exclusion that perpetuates extreme poverty in the country.
References
ROSANO PEÑA, Carlos et al. The effectiveness of income transfers: trends in inequality before and after the Bolsa Família Program. RAP: Brazilian Journal of Public Administration, v. 49, n. 4, 2015.
