Poverty and Inequality Reduction in Brazil – A Parenthesis in History or the Road Ahead?

Between 1992 and 2013, and especially since 2003, Brazil experienced an unprecedented reduction in poverty and income inequality, a process common to several Latin American countries. The objective of this study is to identify the drivers of the social changes that we observed along this period in Brazil, in comparison with other Latin American countries, and to discuss the prospects for the near future. Aspects such as the demographic transition, the reduction in earnings inequality, the country’s sustained economic growth and a set of employment and social policies are relevant to understand the process of reduction in overall poverty and inequality over the last two decades in Brazil. Although demographic changes should continue to play an important role towards poverty reduction in the future, the recent economic downturn puts a question mark over future prospects, at least in the short term. Job creation has already been overtaken by increasing unemployment rates, tax revenues are falling and the resulting fiscal crisis will limit any increase in expenditures with social policies. In the short-term, the country will face the challenge of staying its course regarding the reduction of poverty and inequality in light of a much more adverse economic scenario.