Education or Inflation? The Roles of Structural Factors and Macroeconomic Instability in Explaining Brazilian Inequality in the 1980s

This paper investigates possible explanations for the increases in inequality observed in Brazil during the 1980s. While the static decompositions of inequality by household characteristics reveal that education and race of the household head, as well as geographic location, can account for a substantial proportion of inequality levels, a dynamic decomposition suggests that changes in inequality are not explained by income or allocation effects across these groupings, but by pure within-group inequality effects. The analysis then turns to the role of macro-economic instability, and finds some significant correlation and regression coefficients which suggest a link between inflation and inequality, while poverty appears to be more strongly driven by real wages, growth and employment.Brazil, inequality decomposition, poverty, inflation and unemployment

The Measurement of Educational Inequality: Achievement and Opportunity

This paper proposes two related measures of educational inequality: one for educational achievement and another for educational opportunity. The former is the simple variance (or standard deviation) of test scores. Its selection is informed by consideration of two measurement issues that have typically been overlooked in the literature: the implications of the standardization of test scores for inequality indices, and the possible sample selection biases arising from the Program of International Student Assessment (PISA) sampling frame. The measure of inequality of educational opportunity is given by the share of the variance in test scores that is explained by pre-determined circumstances. Both measures are computed for the 57 countries in which PISA surveys were conducted in 2006. Inequality of opportunity accounts for up to 35 percent of all disparities in educational achievement. It is greater in (most of) continental Europe and Latin America than in Asia, Scandinavia, and North America. It is uncorrelated with average educational achievement and only weakly negatively correlated with per capita gross domestic product. It correlates negatively with the share of spending in primary schooling, and positively with tracking in secondary schools.educational inequality, educational achievement, inequality of opportunity

Global poverty and inequality : a review of the evidence

Drawing on a compilation of data from household surveys representing 130 countries, many over a period of 25 years, this paper reviews the evidence on levels and recent trends in global poverty and income inequality. It documents the negative correlations between both poverty and inequality indices, on the one hand, and mean income per capita on the other. It points to the dominant role of Asia in accounting for the bulk of the world's poverty reduction since 1981. The evolution of global inequality in the last decades is also described, with special emphasis on the different trends of inequality within and between countries. The statistical relationships between growth, inequality and poverty are discussed, as is the correlation between inequality and the growth elasticity of poverty reduction. Some of the recent literature on the drivers of distributional change in developing countries is also reviewed.Inequality,Achieving Shared Growth,Services&Transfers to Poor,Population Policies,Poverty Impact Evaluation

Social protection in Latin America : achievements and limitations

Social protection systems in Latin America have been transformed in the past two decades. Until the 1980s, those who were not covered by the social security arrangements available primarily in the urban formal sector received little public assistance beyond universal subsidies for some food or fuel purchases. Since the 1990s, the introduction of non-contributory social insurance programs (including"social pensions") and conditional cash transfers has substantially extended the coverage and improved the incidence of social assistance. However, the organic growth of subsidized social assistance in parallel to the older social insurance system, financed largely out of taxes on formal sector employment, has led to a dual system that is neither properly equitable nor efficient. The twin challenges that now face social protection in Latin America are to better integrate those two halves of the system, and to develop programs that promote sustainable self-reliance, by moving from"safety nets"to"opportunity ropes."Rural Poverty Reduction,Services&Transfers to Poor,Debt Markets,Insurance Law,Health Monitoring&Evaluation

The analysis of inequality in the Bretton Woods institutions

This paper assesses the evolution of thinking, analysis, and discourse about inequality in the World Bank and the International Monetary Fund since their inception in 1944, on the basis of bibliometric analysis, a reading of the literature, and personal experience. Whereas the Fund was largely unconcerned with economic inequality until the 2000s but has shown a rapidly growing interest since then, the Bank’s approach has been characterized by ebbs and flows, with five different phases being apparent. The degree of interest in inequality in the two institutions appears to be determined largely by the prevailing intellectual profile of the topic in academic research, particularly in economics, and by ideological shifts in major shareholder countries, propagated downward internally by senior management. Data availability, albeit partly endogenous, also plays a role. Looking ahead, Bank and Fund researchers continue to have an important role to play, despite a much more crowded field in inequality research. I suggest that this role involves holding firm to an emphasis on inequality “at the bottom” and highlight four themes that may deserve special attention

The Effects of Expanding Education on the Distribution of Income in Cear.

education, poverty, inequality

Roads to Equality: Wealth Distribution Dynamics with Public-Private Capital Complementarity

This paper proposes a model of wealth distribution dynamics with a capital market imperfection and a production function where public capital is complementary to private capital. A unique invariant steady-state distribution is derived, with three social classes: subsistence workers, 'government dependent' middle-class entrepreneurs and 'private infrastructure owning' upper-class entrepreneurs. It is shown that there is a minimum level of public investment below which the middle class disappears, and that increases in non-targeted public investment over some range lead to unambiguously less inequality of opportunity, as well as to greater output. This provides an additional rationale for an active role for the government in infrastructure, health and education provision, and has implications for foreign aid.Wealth distribution, capital market imperfections, inequality, public investment.

Is there a metropolitan bias ? the inverse relationship between poverty and city size in selected developing countries

This paper provides evidence from eight developing countries of an inverse relationship between poverty and city size. Poverty is both more widespread and deeper in very small and small towns than in large or very large cities. This basic pattern is generally robust to choice of poverty line. The paper shows, further, that for all eight countries, a majority of the urban poor live in medium, small, or very small towns. Moreover, it is shown that the greater incidence and severity of consumption poverty in smaller towns is generally compounded by similarly greater deprivation in terms of access to basic infrastructure services, such as electricity, heating gas, sewerage, and solid waste disposal. The authors illustrate for one country -- Morocco -- that inequality within large cities is not driven by a severe dichotomy between slum dwellers and others. The notion of a single cleavage between slum residents and well-to-do burghers as the driver of urban inequality in the developing world thus appears to be unsubstantiated -- at least in this case. Robustness checks are performed to assess whether the findings in the paper are driven by price variation across city-size categories, by the reliance on an income-based concept of well-being, and by the application of small-area estimation techniques for estimating poverty rates at the town and city level.Rural Poverty Reduction,Subnational Economic Development,City Development Strategies,Regional Economic Development

Is there a metropolitan bias? The inverse relationship between poverty and city size in selected developing countries

This paper provides evidence from eight developing countries of an inverse relationship between poverty and city size. Poverty is both more widespread and deeper in very small and small towns than in large or very large cities. This basic pattern is generally robust to choice of poverty line. The paper shows, further, that for all eight countries, a majority of the urban poor live in medium, small, or very small towns. Moreover, it is shown that the greater incidence and severity of consumption poverty in smaller towns is generally compounded by similarly greater deprivation in terms of access to basic infrastructure services, such as electricity, heating gas, sewerage, and solid waste disposal. The authors illustrate for one country—Morocco—that inequality within large cities is not driven by a severe dichotomy between slum dwellers and others. The notion of a single cleavage between slum residents and well-to-do burghers as the driver of urban inequality in the developing world thus appears to be unsubstantiated—at least in this case. Robustness checks are performed to assess whether the findings in the paper are driven by price variation across city-size categories, by the reliance on an income-based concept of well-being, and by the application of small area estimation techniques for estimating poverty rates at the town and city level.poverty and city size, urban poverty, slums.

Inequality of Outcomes and Inequality of Opportunities in Brazil

This paper departs from John Roemer's theory of equality of opportunities. We seek to determine what part of observed outcome inequality may be attributed to differences in observed 'circumstances', including family background, and what part is due to 'personal efforts'. We use a micro-econometric technique to simulate what the distribution of outcomes would look like if 'circumstances' were the same for everybody. This technique is applied to Brazilian data from the 1996 household survey, both for earnings and for household incomes. It is shown that observed circumstances are a major source of outcome inequality in Brazil, probably more so than in other countries for which information is available. Nevertheless, the level of inequality after observed circumstances are equalized remains very high in Brazil.Inequality of Opportunities, Intergenerational Educational Mobility