The Impact of Brazil's Tax-Benefit System on Inequality and Poverty

Herwig Immervoll, Horacio Levy, Jose Nogueira, Cathal O'Donoghue and Rozane Bezerra de Siqueira ()
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Rozane Bezerra de Siqueira: Universidade Federal de Pernambuco

No 2114, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The Brazilian government raises taxes amounting to 35% of GDP and spends more than two thirds of this on social programmes. These shares are in pair with the OECD averages and well in excess of Latin America averages. However, while tax-benefit systems in most OECD countries reduce income disparities very significantly, the Brazilian government has been much less successful in alleviating inequality and poverty. Focussing on taxes and cash transfers, this paper investigates the impact of the government budget on the income distribution in Brazil, and evaluates its efficiency and effectiveness in reducing inequality and poverty. We present BRAHMS, a new tax-benefit microsimulation model for Brazil and illustrate its use by evaluating the impact of policy on economic inequality. It is argued that microsimulation provides a valuable analytical tool for policy makers in emerging and developing countries in particular.

Keywords: microsimulation; Brazil; inequality; poverty; redistribution (search for similar items in EconPapers)
JEL-codes: C81 H22 H23 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2006-05
New Economics Papers: this item is included in nep-lam, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (37)

Published - published in: Klasen, S. and F. Nowak-Lehmann (eds.), Poverty, Inequality, and Policy in Latin America, MIT Press, 2009

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Working Paper: The Impact of Brazil´s Tax-Benefit System on Inequality and Poverty (2005)
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