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Sustainable Inclusive Growth in Brazil: Past Achievements and Challenges Ahead

Sustainable Inclusive Growth in Brazil: Past Achievements and Challenges Ahead. Ricardo Paes de Barros (IAS/ Insper ) , Diana Coutinho (IAS), Marina de Cuffa (IAS/ Insper ), Samuel Franco (OPE Sociais ), Beatriz Garcia ( Insper /IAS), Rosane Mendonça (UFF),

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Sustainable Inclusive Growth in Brazil: Past Achievements and Challenges Ahead

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  1. Sustainable Inclusive Growth in Brazil: Past Achievements and Challenges Ahead Ricardo Paes de Barros (IAS/Insper), Diana Coutinho (IAS), Marina de Cuffa (IAS/Insper),Samuel Franco (OPE Sociais), Beatriz Garcia (Insper/IAS), Rosane Mendonça (UFF), Laura Müller Machado (IAS/Insper), Camila Soares (IAS/Insper) Brasília October, 2017

  2. 1 Achievements

  3. 1. Achievements

  4. 1. Achievements

  5. 1. Achievements

  6. 1. Achievements

  7. 1. Achievements Almost ½ of the reduction in poverty is due to the reduction in inequality

  8. 1. Achievements

  9. 1. Achievements

  10. 1. Achievements

  11. 2 It is possible to sustain this rate of poverty reduction

  12. 2.It is possible to sustain this rate of poverty reduction Inequality remains very high

  13. 2.It is possible to sustain this rate of poverty reduction Evolution of the percentage of the total income going to the poorest 40% and 50% in Brazil Bottom 50% Percentage of total income (%) Bottom 40%

  14. 2.It is possible to sustain this rate of poverty reduction Severe Fiscal Imbalance

  15. 2.It is possible to sustain this rate of poverty reduction Distribution of countries according to total government expenditure as a percentage of GDP Total government expenditure as percentage of GDP Percentage of countries

  16. 2.It is possible to sustain this rate of poverty reduction Evolution of the wage inequality among employees in the public and private sectors Employees in the Public Sector Gini coefficient Employees in the Private Sector

  17. 3 Required growth and inequality reduction

  18. 3. Required growthand inequality reduction

  19. 3. Required growthand inequality reduction

  20. 3. Required growthand inequality reduction

  21. 3. Required growthand inequality reduction

  22. 4 Better Targeting

  23. 4. BetterTargeting “BolsaFamília” Targeting System based on reported income has very serious flaws

  24. 4. BetterTargeting Age Profile of the Extreme Poverty Rate Percentage of the ‘population below the extreme poverty line Mean Age

  25. 4. BetterTargeting Access to Daycare Centers (children up to 3 years old) by tenths of the income distribution: Brazil, 2015 Private percentage of children up to 3 years old Public First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth

  26. 4. BetterTargeting Evolution of the access to daycare centers (children up to 3 years old) by tenths of the income distribution: Brazil, 2001-2013 percentage of children up to 3 years old

  27. 5 Balanced growth of earnings and productivity

  28. 5. Balancedgrowthofearningsandproductivity Labor Productivity and Real Labor Income (2001=100) Real Labor Income Accumulated growth since 2001 Labor Productivity Nota: Renda deflacionada com INPC; PIB com deflator implícito do PIB. Fonte: Renda, Pesquisa Nacional por Amostra de Domicílios (PNAD/IBGE); PIB, Sistema de Contas Nacionais (SCN/IBGE).

  29. 5. Balancedgrowthofearningsandproductivity Growth in Labor Productivity and Real Labor Income: 1996 to 2003 Alignment or misalignment? Labor Income (1996=100) Labor Productivity (1996=100) Nota: Produtividade definida como PIB real/trabalhadores; Remuneração deflacionada com INPC; Produtividade com deflator implícito do PIB. Fonte: Remuneração, Pesquisa Nacional por Amostra de Domicílios (PNAD/IBGE); Produtividade, Sistema de Contas Nacionais (SCN/IBGE).

  30. 5. Balancedgrowthofearningsandproductivity Growth in Labor Productivity and Real Labor Income: 1996 to 2011 Alignment or misalignment? 2011 Labor Income (1996=100) Labor Productivity (1996=100) Nota: Produtividade definida como PIB real/trabalhadores; Remuneração deflacionada com INPC; Produtividade com deflator implícito do PIB. Fonte: Remuneração, Pesquisa Nacional por Amostra de Domicílios (PNAD/IBGE); Produtividade, Sistema de Contas Nacionais (SCN/IBGE).

  31. 5. Balancedgrowthofearningsandproductivity Imbalance or Alignment Between Labor Productivity and Labor Earnings?

  32. 6 Productive Inclusion

  33. 6. ProductiveInclusion Generating Persistent Poverty? Labor Marker Difficult in Absorbing Very Low-Skilled Youth

  34. 6. ProductiveInclusion Excess Turnover

  35. 6. ProductiveInclusion

  36. 6. ProductiveInclusion

  37. 6. ProductiveInclusion Average annual growth rate in labor productivity: Latin America 2001-2011 Latin America without Brazil average annual growth rate (%)

  38. 6. ProductiveInclusion Average annual growth rate in labor productivity: Africa 2001-2011 average annual growth rate (%)

  39. Connectivity between education and economic activity 7

  40. 7. Connectivitybetweeneducationandeconomicactivity Evolution of schooling in adult population and labor production (1980-2010) In Chile, over the past 30 years, productivity growth has been $ 3,000 per additional year of workforce schooling. Average Labor Productivity – GDP per worker (Thousand US$ (PPP) 1990) Averageschoolingonadultpopulation (successfullyconcluded grades)

  41. 7. Connectivitybetweeneducationandeconomicactivity Evolution of schooling in adult population and labor production (1980-2010) Type I: Countries where productivity grows $ 3,000 per additional year of workforce schooling Average Labor Productivity – GDP per worker (Thousand US$ (PPP) 1990) Averageschoolingonadultpopulation (successfullyconcluded grades)

  42. 7. Connectivitybetweeneducationandeconomicactivity Evolution of schooling in adult population and labor production (1980-2010) Type II: Countries where productivity grows $ 4,000 per additional year of workforce schooling Average Labor Productivity – GDP per worker (Thousand US$ (PPP) 1990) Averageschoolingonadultpopulation (successfullyconcluded grades)

  43. 7. Connectivitybetweeneducationandeconomicactivity Evolution of schooling in adult population and labor production (1980-2010) Type III: Countries where productivity grows $ 7,000 per additional year of workforce schooling Average Labor Productivity – GDP per worker (Thousand US$ (PPP) 1990) Averageschoolingonadultpopulation (successfullyconcluded grades)

  44. 7. Connectivitybetweeneducationandeconomicactivity Evolution of schooling in adult population and labor production (1980-2010) Type 0: Countries where productivity doesn’t grow with additional year of workforce schooling Average Labor Productivity – GDP per worker (Thousand US$ (PPP) 1990) Averageschoolingonadultpopulation (successfullyconcluded grades)

  45. 7. Connectivitybetweeneducationandeconomicactivity Annual progress of average schooling of the working age population over the past 25 years by country Over the past 25 years, Brazil has undergone an unprecedented educational expansion. More than 90% of the countries had a lower progress in this period than Brazil. Annualprogressofaverageshooling (yearsofschooling) Countries distribution Fonte: HumanDevelopment Data (http://hdr.undp.org/en/data).

  46. 7. Connectivitybetweeneducationandeconomicactivity Annual growth rate of GDP per capita over the past 25 years by country Over the past 25 years, Brazilian growth has been slow. Less than 40% of the countries had lower economic growth in that period than Brazil. Annualgrowth rate of GDP per capita (GDP/habitant) Countries distribution Fonte: HumanDevelopment Data (http://hdr.undp.org/en/data).

  47. 7. Connectivitybetweeneducationandeconomicactivity In Brazil, growth in schooling has not been accompanied by significant growth in labor productivity. More than 2/3 of the countries have translated schooling into productivity better than Brazil. Ratio between productivity and schooling progress over the past 25 years by country Rationbetweenproductivityandschoolingprogress (%) Countries distribution Fonte: HumanDevelopment Data (http://hdr.undp.org/en/data).

  48. 7. Connectivitybetweeneducationandeconomicactivity Annual growth rate of GDP per capita over the past 25 years by country If Brazil had the same capacity to translate education into productivity as either Turkey or Korea, Brazilian economic growth would have been two to three times faster than it was over the last 25 years. Annualgrowth rate of GDP per capita (GDP/habitant) Countries distribution Fonte: HumanDevelopment Data (http://hdr.undp.org/en/data).

  49. 7. Connectivitybetweeneducationandeconomicactivity Evolution of the wage differentials by educational level Earnings gain due to one additional year of education (%)

  50. 8 Ageing

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