iSEEK - Education

17. Note that to m ake the data from 2004 com patible w ith the data from 1995, it w as necessary to discard the inform ation that referred to the Rural North (w ith the exception of the state of Tocantins) since only after 2004 did this region begin to be included in the PNAD sam ple. 18. Recent studies on Brazil inequality (Soares(2006) and H offm an(2005)) have concentrated on the fall in inequality betw een 2001-2004 as the latter year indicate the start of the continuous fall in inequality

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interest paid on federal governm ent bonds and, therefore, can be understood as a form of governm ental transfer to the richest segm ent of the population at a m agnitude w hich is m uch greater than that of the transfers targeted on the poor.1 M ost of the prelim inary investigations that have been released up to now have only called attention to the great change verified in the com ponent “other incom es” in term s of the volum e of resources m easured, as w ell as in its distribution: from the m ost

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10 International Poverty Centre W orking Paper nº 21 2.3 DISAGG REGATING TH E “O TH ER INCO M ES” 2.3.1 Separating the Incom e Com ponents D eclared in “O ther Incom es” To separate the com ponent “other incom es”, the idiosyncrasies of each program m e m ust be taken into consideration. In m onetary term s, the BPC is clearly differentiated from the other cash transfer program m es. O f the eight cash transfer program m es investigated by the 2004 PNAD supplem ent, it is the only one that is

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biases the results of the incidence analysis. Nonetheless, it is im portant to observe that w hen one refers to the existence of m ore than one BPC beneficiary per household, the Elderly Persons Act11 perm its the exclusion of the incom e of the BPC for the elderly in the com putations of the value of the fam ily incom e per capita if an elderly person in the sam e household requests the benefit, w hich can result in the accum ulation of BPCs in the sam e household (M edeiros, Diniz & Squinca, 2006). The

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12 International Poverty Centre W orking Paper nº 21 com prise a series of transferences w ith rules that are distinct for each program m e and unknow n unidentifiable from the PNAD dataset, and there is no inform ation about the presence of disabled persons in the household, w hich is a problem for BPC. This does not m ean that there is no clear prevalence of typical values from the different cash transfer program m es: R$ 7—Cooking G as Stipend (per m onth); R$ 15—Bolsa Família and Bolsa Escola

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confused w ith that of another cash transfer program m e. 3 INCID ENCE AND EFFECTS O N INEQ U ALITY AND PO VERTY 3.1 INCIDENCE O F TH E CASH TRANSFER PRO GRAM M ES In order to analyze the incidence of the incom e of the cash transfer program m es, w e w ill analyze the concentration curves and the concentration indices of the incom e that com es from the BPC, from the incom e that com es from the other cash transfer program m es (Bolsa Família and others), and from the incom e that com es from the

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age. For this reason, w e analyze pensions that are below or equal to the m inim um w age in order to capture those non- contributory pensions w hich are also an im portant com ponent of the cash transfers in Brazil. Figure 5 show s that sim ilar to the BPC and to the Bolsa Família, pensions linked to the m inim um w age seem to be w ell targeted in an ex-ante analysis: 64% of the reported incom e in this com ponent goes to fam ilies that w ould be living below the poverty line w ithout this

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Fabio Veras Soares, Sergei Soares, M arcelo M edeiros and Rafael G uerreiro O sório 21 Returning to the concentration of the different com ponents, it is interesting to observe that the m ost concentrated com ponent is the one that refers to the incom e from rents w ith a concentration index of 77.80, follow ed by the pensions and retirem ent funds that are above the social security floor, w ith a concentration index of 75.78, and by the residual incom e com ponent that w e associate w ith

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0.149 0.244 0.056 - 0.025 -0.137 0.203 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.2 RO BUSTNESS ANALYSIS O F TH E DISAGGREGATIO N O F TH E “O TH ER INCO M ES” CO M PO NENT In order to analyze the robustness of the disaggregation of the “other incom es” com ponent, w e w ill use the distribution of this com ponent in 1995 (at 2004 values) as our reference param eter.16 Let us assum e that the average real incom es from “interest” (the original 2004 other incom es) appropriated by each

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24 International Poverty Centre W orking Paper nº 21 3.3 DECO M PO SITIO N O F TH E EFFECTS O N INEQ UALITY The recent reduction in inequality in Brazil is already a know n fact. Soares (2006) show s that the 2004 G ini Index (0.568) is the low est since the National H ousehold Survey started in the m id-1970’s.18 Despite the trem endous w eight of the labor incom e w hich com prises 73% of the total incom e, an im portant part of the reduction in inequality can be attributed to the “other incom

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transferências não são a causa principal da redução da desigualdade”. Econômica. V.7 N.2. Dezem bro. IBG E (2006) “Aspectos Com plem entares de Educação e Acesso a Trasferências de Renda de Program m eas Sociais. PNAD. M edeiros, M .; Diniz, D.; Squinca, F. (2006)“Cash Benefits to Disabled Persons in Brazil: an analysis of the BPC – Continuous Cash Benefit Program m e”. IPC W orking Paper 16. Brasilia. International Poverty Centre. M DS – M inistério do Desenvolvim ento Social (2006) “M anual de O rientação do

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17. Note that to m ake the data from 2004 com patible w ith the data from 1995, it w as necessary to discard the inform ation that referred to the Rural North (w ith the exception of the state of Tocantins) since only after 2004 did this region begin to be included in the PNAD sam ple. 18. Recent studies on Brazil inequality (Soares(2006) and H offm an(2005)) have concentrated on the fall in inequality betw een 2001-2004 as the latter year indicate the start of the continuous fall in inequality

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Distinguishing Chronic Poverty from Transient Poverty in Brazil: Developing a Model for Ps...

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PN AD data and Rocha (2003). 4 MODEL SPECIFICATION AND DATA SOURCES Our Transient-Chronic analysis (henceforth T-C) is based on the com ponent approach (e.g., com paring constant versus fluctuating com ponents of a poverty index). It considers the distinction betw een a stationary or perm anent com ponent and a transient com ponent, both of w hich contribute to the propensity to poverty of each cohort. In contrast to the em pirical analysis proposed by Ravallion (1988) and Jalan and Ravallion (1998

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PN AD data and Rocha (2003). 4 MODEL SPECIFICATION AND DATA SOURCES Our Transient-Chronic analysis (henceforth T-C) is based on the com ponent approach (e.g., com paring constant versus fluctuating com ponents of a poverty index). It considers the distinction betw een a stationary or perm anent com ponent and a transient com ponent, both of w hich contribute to the propensity to poverty of each cohort. In contrast to the em pirical analysis proposed by Ravallion (1988) and Jalan and Ravallion (1998

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Rafael Perez Ribas and Ana Flávia M achado 11 and the dow nw ard m obility rate can be calculated as follow s: [ ] ( )( )1 1,2212 1 ;, 1)1(|0Pr − −− − − ′ −Φ −+′−′−Φ ==−>= dj djdj jdjdjd z xz PPe µβ ρωγµβ . (13) In this M arkov m odel, chronic poverty, w hich is identified in Equation (7), depends not only on individual characteristics, represented by vectors jz and jx , but also on a state dependence com ponent. This state dependence is pronounced w hen the probability to be poor in d is

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18 International Poverty Centre W orking Paper nº 36 Finally, 73 per cent of total observed poverty from 1993 to 2003 (0.2013 in Table 2) is derived from a chronic condition, or a ‘stationary’ propensity to poverty (0.1468/0.2013) w hile the rem aining 27 per cent is derived from transient poverty (0.0545/0.2013). W hen different poverty lines are com pared, the deprivation w ith the highest chronic com ponent is that of absolute indigence (82 per cent) w hile the other absolute poverty m easures

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Rafael Perez Ribas and Ana Flávia M achado 19 vulnerable to changes in their state. Those w ho have com pleted m iddle school show ed the low est chronic poverty level, 7.5 per cent, and w ere less subject to fluctuations in incom e. W ith regard to race, nonw hites exhibit the w orst poverty indicators, regardless of sex. In contrast, the characteristics that differentiate m en from w om en are sim ilar across races. M en present higher persistence (s) and dow nw ard m obility (e) rates: as a

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20 International Poverty Centre W orking Paper nº 36 Sim ulations (1) and (5), w hen com pared, show that the com pletion of m iddle school education by the household head reduces the probability of chronic poverty and generates significant transient gains. This result is sim ilar to that regarding individual features analyzed in Table 3. The differences observed in the indicators reveal that education goes a long w ay in explaining not only the relative position of individuals in the incom e

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Conditional Cash Transfers in Brazil, Chile and Mexico: Impacts upon Inequality

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8 International Poverty Centre W orking Paper nº 35 of recipient (e.g., w age em ployee or self-account w orker). The inform ation available in Chilean datasets m akes it very difficult, how ever, to reverse this adjustm ent. Also, this adjustm ent cannot be reproduced for the other countries. The third challenge w as related to the construction of total incom e.6 This involved questions about w hat should be com puted, and w hat should not. In Chile and Mexico, it is custom ary to im pute the

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6 International Poverty Centre W orking Paper nº 35 The transfer has three basic com ponents, tw o of w hich are conditional and one non- conditional. H ouseholds benefiting from O portunidades receive an unconditional transfer in the am ount of 250 pesos ($ 32 PPP) per elderly adult in the household. Additionally, households receive a food support transfer of 189 pesos ($ 24 PPP) conditional on attending training sessions on nutrition and health. The m ore substantive transfer, though, is the

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8 International Poverty Centre W orking Paper nº 35 of recipient (e.g., w age em ployee or self-account w orker). The inform ation available in Chilean datasets m akes it very difficult, how ever, to reverse this adjustm ent. Also, this adjustm ent cannot be reproduced for the other countries. The third challenge w as related to the construction of total incom e.6 This involved questions about w hat should be com puted, and w hat should not. In Chile and Mexico, it is custom ary to im pute the

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Sergei Soares; Rafael G uerreiro O sório; Fábio Veras Soares; Marcelo Medeiros and Eduardo Zepeda 9 W here G is the G ini index, ck represents the coefficient of concentration of factor com ponent k relative to total incom e and φk is the w eight of factor k in total incom e. D ifferencing [1] w e have: ( )k k k k k G c cϕ ϕ∆ = ∆ + ∆ � [2] The first term in the sum m ation represents the com position effect and the second the effect of the change in the coefficient of concentration. If w e

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rounded. Source: Pnad 1995, 2004; Casen 1996, 2003; Enigh 1996, 2004. Incom e from social security also had an im portant contribution to the dynam ics of inequality. It raised inequality in Brazil and Mexico but not in Chile. In Brazil and Mexico, a com bination of greater concentration and a larger share of this m ore concentrated incom e com ponent in the total overturned one sixth of the equalizing effect of the im proved distribution of labour incom es in Mexico and over-turned one quarter in Brazil

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Is all Socioeconomic Inequality among Racial Groups in Brazil Caused by Racial Discriminat...

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6 International Poverty Centre Working Paper nº 43 Brazilians. That is to say, Brazilians tend to understand race by phenotype, particularly by skin colour and hair type. Generally speaking, those who have studied the racial classification in Brazil have com e to the conclusion that although far from perfect, it is suitable for research on racial inequalities in the country. Although the classification has been a subject of passionate public debates, when specialists gather to discuss changing it

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6 International Poverty Centre Working Paper nº 43 Brazilians. That is to say, Brazilians tend to understand race by phenotype, particularly by skin colour and hair type. Generally speaking, those who have studied the racial classification in Brazil have com e to the conclusion that although far from perfect, it is suitable for research on racial inequalities in the country. Although the classification has been a subject of passionate public debates, when specialists gather to discuss changing it

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to prim ary education, for instance, was nearly universalized during the 1990s. However, com pletion of prim ary education is still a problem , and access to secondary schools is a bottleneck in the educational system . Nevertheless, educational indicators disaggregated by race show a dim inishing proportional gap. At the sam e tim e, the absolute gap, depending on the indicator chosen, could be stable or even increasing. To illustrate such trends, we have constructed Chart 5, which shows the

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12 International Poverty Centre Working Paper nº 43 was 5.6 percentage points. In three decades, this indicator jum ped to 25.1 per cent for Whites and 18.3 per cent for Blacks—so that the proportional gap was 1.4 but the absolute gap was 6.9 percentage points. CHART 5 Generalized Concentration Curves of the Adult Population w ith Com pleted Secondary Education in the Incom e D istribution. Brazil, 1976-2005 0.0 0.1 0.2 0.3 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 W-1976 B-1976 W-1987 B-1987 W

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16 International Poverty Centre Working Paper nº 43 Mato Grosso do Sul, Goiás and D istrito Federal. The Southeast is: Minas Gerais, Espírito Santo, Rio de Janeiro and São Paulo. And the South is: Paraná, Santa Catarina and Rio Grande do Sul. The educational path followed by students who enter the Brazilian educational system has rem ained the sam e during the period 1976-2005. Basically, seven-year-olds would enter prim ary school,13 which was com posed of eight grades; after finishing prim ary

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20 International Poverty Centre Working Paper nº 43 The differential between Blacks and Whites reached its peak in 1996, when the relative frequency of Whites attending university or college courses was m ore than five tim es greater than that of Blacks. At the sam e tim e, the proportion of Blacks still in prim ary school (19-23 years old) was twice that of Whites. Finally, in 2005, m ore than half of Whites still attending school were in tertiary or post-graduate courses, com pared to less than one

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odel, we use a dependent variable that is dichotom ous (i.e., literate or illiterate) to characterize our cohort. Five years later, in 1987, we expect the cohort to have com pleted half of the cycle of prim ary education (i.e., fourth grade)—except for those born in 1977, who would have been expected to still be attending the fourth grade. So, in 1987 our dependent dichotom ous variable is com pleted elem entary education (or not), and the m odel was run just for those 11-14 years of age. We m eet our

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—that the effects of racial discrim ination are not independent of social origins. However, the evidence presented here suggests, interestingly, that am ong groups for which an educational outcom e has becom e com m onplace, the effect of racial discrim ination is alm ost non-existent. The effects of racial discrim ination are also weaker am ong groups for which that outcom e is very uncom m on. Interestingly, such effects are m ore intense am ong the groups for which the outcom e is on the verge of becom

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The Impact of Relative Prices on Welfare and Inequality in Brazil, 1995-2005

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10 International Poverty Centre W orking Paper nº 37 Chart 4 illustrates a case of second order stochastic dom inance using the 1995 and 2005 incom e distributions. If the tw o are com pared, neither dom inates the other in the first degree since the relatively poor w ere better off in 2005 and the relatively rich in 1995. H ow ever, since the accum ulated incom e in 2005 is greater than in 1995 for all positions, the form er dom inates the latter in the second order com parison. Put in other w ords

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8 International Poverty Centre W orking Paper nº 37 3.2 TH E EVO LUTIO N O F W ELFARE AND IN EQ U ALITY: 1995-2005 W e now analyze the evolution of w elfare and inequality am ong the Brazilian population through com parison of sum m ary and full distribution m easures. W e also com pare results obtained through the use of a general deflator w ith those obtained through the hundredth- specific deflators described in the previous section. Before proceeding further, w e w ish to w arn all readers that

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10 International Poverty Centre W orking Paper nº 37 Chart 4 illustrates a case of second order stochastic dom inance using the 1995 and 2005 incom e distributions. If the tw o are com pared, neither dom inates the other in the first degree since the relatively poor w ere better off in 2005 and the relatively rich in 1995. H ow ever, since the accum ulated incom e in 2005 is greater than in 1995 for all positions, the form er dom inates the latter in the second order com parison. Put in other w ords

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each dim ension. H ow ever, the m agnitude of these effects depends upon how inflation and changes in relative prices are addressed: 1) specific deflators reduce average incom es by about seven percentage points – the black circles are alw ays below the grey circles in Chart 12; 2) specific deflators reduce the G ini coefficient by alm ost one G ini percentage point – the black circles are alw ays left-shifted com pared to the grey circles; and 3) this com bined result leads to only a sm all reduction

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