Is the Bolsa Família Program capable of reducing poverty in Brazil?

Responsible researcher: Angelo Cruz do Nascimento Varella

Article title: THE EFFECTIVENESS OF INCOME TRANSFERS: INEQUALITY TRENDS BEFORE AND AFTER THE BOLSA FAMÍLIA PROGRAM

Article authors: Carlos Rosano Peña; Danielle Sandi Pinheiro; Pedro HM Albuquerque; Loyane Mota Fernandes;

Location of intervention: Brazil

Sample size: per capita household income per tenth of the population, of the 27 Brazilian states, between 1999 and 2009

Major theme: Economic Policy and Governance

Variable of main interest: Poverty reduction

Type of Intervention: Analysis of the effects of the Bolsa Família Program on poverty reduction based on data collected from PNAD, in the period between 1999 and 2009

Assessment method: Differences in Differences

The Policy Problem

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 appropriate income of 1% of the richest portion of the Brazilian population was around 17 times greater than the income of the poorest 40%, which demonstrates a strong concentration of financial resources, which was observed in all regions of the country.

Poverty, income concentration and regional inequality are Brazilian structural problems, which have deepened with national economic expansion. Several factors such as low levels of education, insufficient and poor quality public services, corruption, high tax burden and inequalities of opportunities aggravate 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 are hampered.

Such effects negatively impact Brazilian economic development. According to researchers, traditional public policies adopted in the country have mistakenly prioritized economic growth as the main factor of inclusive development for decades. However, from the end of the 20th century, Brazil began to adopt public policies for income redistribution, with the aim of mitigating the effects of inequality and reducing the harm resulting from poverty and misery.

The Implementation and Evaluation Context

At the turn of the 20th century, public policies for income redistribution and assistance against poverty and misery emerged in Brazil as a solution to the problems of socioeconomic inequalities. Public policies such as the Child Labor Eradication Programs, Bolsa Escola, Bolsa Alimentação, 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 compensation from the families covered, such as prenatal exams for pregnant women, breastfeeding, childhood vaccinations 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 in accordance with the number of children and adolescents who were part of the family nucleus. Thus, an attempt was made to centralize and optimize federalized management, improving the execution of assistance programs and maintaining the logic of compensation from families and the implementation of follow-up and monitoring systems.

During the first decade of implementation, the PBF was considerably expanded. Between 2003 and 2012, the program went from a budget of 3.2 billion reais to serve 3.6 million families, to a total of 20.2 billion reais, serving 13.7 million Brazilian homes. Consequently, the program began to be widely debated, so that one of the main questions refers to the PBF's ability to combat poverty and reduce social inequality.

Policy/Program Details

According to the MDS, the PBF considered individuals to be in extreme poverty when their per capita was less than R$70 per month. In turn, an individual whose family income per person was between R$70 and R$140 per month was considered to be in poverty. Depending on the number of children, whether children or teenagers, benefits ranged from R$32 to R$306 per month. Any family that fits these characteristics would be entitled to the benefit, so every two years the records are reviewed to check whether the conditions for receiving it are met. It is worth noting that families capable of participating in the program, but who had difficulties in meeting the necessary compensation, received assistance assistance from the government with the aim of returning to the established conditions.

In order to investigate the consequences of the implementation of the PBF and measure its effects on combating poverty in Brazil, the researchers used the IPEADATA database, from the Institute for Applied Economic Research (IPEA), referring to the income proportions of the Brazilian population according to with household income. This specific database is created from the National Household Sample Survey (PNAD), carried out 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 their per capita . This 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 10 tenths of the population according to per capita household income

The Assessment Method

Based on the data collected, the researchers divided the base into two periods. The first, comprising the years 1999 to 2003, represents the period prior to the implementation of the PBF. The second, comprising the years 2005 to 2009, represents the period after the implementation of the program. 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, whether or not they move between classes. In other words, if it is possible to identify the transition between the proportions of lower classes to higher classes, following the implementation of the PBF, it is feasible to argue that the program had a direct impact on the fight against poverty and misery.

Furthermore, by comparing the same income class transition phenomenon in the period before and after the implementation of the PBF, it is possible to compare the efficiency of the unified program with the model composed of several parallel federal aids. To this end, 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:

1. Before the Bolsa Família Program

The results indicate that income transfer policies prior to the PBF 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 classes 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 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 implementing the program, the results obtained point to a better situation and more conducive to social mobility. The probabilities associated with remaining in the lowest classes decreased after the PBF, so 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 advancement 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 reduction in levels of poverty and misery in the country.

• Public Policy Lessons

From 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 layers of society to obtain better conditions for social mobility, reducing the levels of poverty and misery in Brazil. These results indicate that the unification of previous income transfer programs in the PBF was beneficial to Brazilian society, so that the evolution and increase in the scope of the program had positive impacts in the search for breaking the “poverty cycle”.

In this way, it is possible to affirm that expanding the scope and benefits of the program have the potential to reduce the negative impacts of poverty and misery in Brazil, reducing socioeconomic inequalities and mitigating the dynamics of the cycle of social exclusion that endures extreme poverty. in the country.

References

ROSANO PEÑA, Carlos et al. The effectiveness of income transfers: inequality trends before and after the Bolsa Família Program. RAP: Brazilian Journal of Public Administration, v. 49, no. 4, 2015.