The impact of social spending over indicators of inequality and poverty in the Brazilian states in the period 2004-2009

Abstract

This paper aims to analyze the effects of social spending on poverty indicators and indexes of income inequality in the period 2004-2009. The methodology used was the econometric technique of panel data fixed effects, due to the suitability of this method to the data available. Results show that in the analyzed period reduction decrease in poverty indicators related to the Brazilian states where the effects of the Bolsa Família Program proved statistically significant. However, no evidence was found that the Bolsa Família Program have produced statistically significant effects on the rates of income inequality. It was also found that social spending on education and health care also reduces poverty, but it is not possible to state that they have produced significant effects on income inequality. Finally it was established the important role of economic growth on poverty reduction and income inequality.