THE IMPACT OF INCOME GROWTH, INEQUALITY AND GOVERNMENT TRANSFERENCES OVER BRAZILIAN MUNICIPALITIES’ POVERTY

Abstract

This paper estimates the income (from work and government transferences) elasticity and the income inequality elasticity with respect to poverty in Brazilian municipalities in 1991 and 2000. The elasticities are calculated using quantile regression. It was observed that the income inequality elasticities are bigger than income elasticity, which is bigger than government income transference elasticity, which shows low values. The income and income inequality elasticity has been diminishing during the period. Mainly, in the quantiles with a higher incidence of poor people. By other side, the government income transference grew in municipalities with more poor people in the same period, which implies that this politic tool had become relatively more efficient in poverty reduction. The paper concludes that poverty reduction policies should consider the existent differences presented by Brazilian municipalities’ income distribution.