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INEQUALITY
Country chosen: Brazil
(i) ASSESSMENT OF NATURE & LEVEL OF INEQUALITY IN BRAZIL
In order to assess the nature and level of inequality in Brazil, the following two
measures of inequality are chosen:
GINI Index
Income share held by highest 10%
Countries chosen for comparison (having similar per capita GNI (PPP), 2015:-
Brazil GNI Per capita (PPP) = $15140
Mexico $16860
Costa Rica $ 14910
ASSESSMENT OF GINI INDEX
The Gini coefficient (sometimes expressed as a Gini ratio or Gini index) is a measure
of statistical dispersion intended to represent the income or wealth distribution of a
nation's residents, and is the most commonly used measure of inequality. It is often
used as a gauge of economic inequality, measuring income distribution or, less
commonly, wealth distribution among a population. The coefficient ranges from 0 (or
0%) to 100%, with 0 representing perfect equality and 100 representing perfect
inequality
As can be clearly seen from the data, Brazil has the highest Gini coefficient amongst
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the three countries with a value of 51.5%. Mexico has the lowest, 48.2%. It represents
a higher level of inequality in Brazil.
ASSESSMENT OF INCOME SHARE HELD BY HIGHEST 10 %
Percentage share of income or consumption is the share that accrues to subgroups of
population indicated by deciles or quintiles.
As is evident from the data, greatest percentage of income is held by the highest 10%
in case of Brazil. This is followed by Mexico and Costa Rica has the lowest income
share held by the highest 10% population. This shows that Brazil has the highest
inequality amongst these countries.
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(ii) Brazil 1990-1995
(a) GINI index
\
GINI Index of Brazil had a steady increase from being 53.17% in 1992 to 60.12 % in
1993 showing an upward trend. However, the current GINI index is 51.5 % quite
lower than that of 1993.
(b) Income share held by highest 10%
Similarly, income share held by highest 10% has also shown a steady increase from
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1990 to 1995 which in the subsequent years has fallen to a present value of 40.7%
Increase in inequality in the early 1990z is attributable largely to high and accelerating
inflation. Research also suggests another factor, which was gradual expansion in the
educational levels of the labor force.
Inequality decomposition analysis suggests that three main forces combined to reduce
income inequality from 1993 onwards. First, the single most important correlate of
individual incomes in Brazil, as in most of Latin America, is educational attainment.
In fact, the data indicates that over a third of overall inequality in Brazil can be
accounted for by differences across five groups of households, sorted by the education
of the head. Interestingly, there is some evidence that this share, while still very
significant, has been falling, due to a secular decline in average returns to schooling
over the last two decades.
Second, there has been a remarkable convergence in household incomes between the
country’s rural and urban areas, which has replaced and added to the inter-state
convergence that had been documented until the mid-1980s. Third, a decomposition
of inequality by income sourcessuch as employment earnings (formal and informal);
self-employment incomes; labor incomes of employers; social insurance transfers;
and a residual category that consists largely of capital incomes and social assistance
transferssuggests that receipts of cash-based social assistance transfers from the
government has become much more widespread. There is also evidence that these
transfers have become better targeted to the poor. From 1993 to 2004, mean “other”
incomes have risen, and their inequality level has fallen substantially. The population
share receiving incomes from this source has almost doubled, from 16% to 30%, and
inequality among recipients has fallen.
SOURCES
World Bank data on inequality
https://revista.drclas.harvard.edu/book/rise-and-fall-brazilian-inequality

Unformatted Attachment Preview

INEQUALITY Country chosen: Brazil (i) ASSESSMENT OF NATURE & LEVEL OF INEQUALITY IN BRAZIL In order to assess the nature and level of inequality in Brazil, the following two measures of inequality are chosen: ➢ GINI Index ➢ Income share held by highest 10% Countries chosen for comparison (having similar per capita GNI (PPP), 2015:• Brazil GNI Per capita (PPP) = $15140 • Mexico $16860 • Costa Rica $ 14910 ASSESSMENT OF GINI INDEX The Gini coefficient (sometimes expressed as a Gini ratio or Gini index) is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation's residents, and is the most commonly used measure of inequality. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population. The coefficient ranges from 0 (or 0%) to 100%, with 0 representing perfect equality and 100 representing perfect inequality As can be clearly seen from the data, Brazil has the highest Gini coefficient amongst the three countries with a value of 51.5%. Mexico has the lowest, 48.2%. It represents a higher level of inequality in Brazil. ASSESSMENT OF INCOME SHARE HELD BY HIGHEST 10 % Percentage share of income or consumption is the share that accrues to subgroups of population indicated by deciles or quintiles. As is evident from the data, greatest percentage of income is held by the highest 10% in case of Brazil. This is followed by Mexico and Costa Rica has the lowest income share held by the highest 10% population. This shows that Brazil has the highest inequality amongst these countries. (ii) Brazil 1990-1995 (a) GINI index \ GINI Index of Brazil had a steady increase from being 53.17% in 1992 to 60.12 % in 1993 showing an upward trend. However, the current GINI index is 51.5 % quite lower than that of 1993. (b) Income share held by highest 10% Similarly, income share held by highest 10% has also shown a steady increase from 1990 to 1995 which in the subsequent years has fallen to a present value of 40.7% Increase in inequality in the early 1990z is attributable largely to high and accelerating inflation. Research also suggests another factor, which was gradual expansion in the educational levels of the labor force. Inequality decomposition analysis suggests that three main forces combined to reduce income inequality from 1993 onwards. First, the single most important correlate of individual incomes in Brazil, as in most of Latin America, is educational attainment. In fact, the data indicates that over a third of overall inequality in Brazil can be accounted for by differences across five groups of households, sorted by the education of the head. Interestingly, there is some evidence that this share, while still very significant, has been falling, due to a secular decline in average returns to schooling over the last two decades. Second, there has been a remarkable convergence in household incomes between the country’s rural and urban areas, which has replaced and added to the inter-state convergence that had been documented until the mid-1980s. Third, a decomposition of inequality by income sources—such as employment earnings (formal and informal); self-employment incomes; labor incomes of employers; social insurance transfers; and a residual category that consists largely of capital incomes and social assistance transfers—suggests that receipts of cash-based social assistance transfers from the government has become much more widespread. There is also evidence that these transfers have become better targeted to the poor. From 1993 to 2004, mean “other” incomes have risen, and their inequality level has fallen substantially. The population share receiving incomes from this source has almost doubled, from 16% to 30%, and inequality among recipients has fallen. SOURCES ➢ World Bank data on inequality ➢ https://revista.drclas.harvard.edu/book/rise-and-fall-brazilian-inequality Name: Description: ...
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