Recent studies on economic inequality, poor education and other determinants of poverty were presented and analyzed during a recent seminar at IDB headquarters aimed at social policy design for fighting poverty.
Income distribution is a problem throughout the Americas, but particularly in Brazil, where the richest 10 percent of the population has an income equal to the remaining 90 percent. It is well known that poverty is sensitive to inequality, but IDB researcher Carlos Alberto Herrán showed new data revealing that in Brazil, education accounts for 40 percent of total inequality.
Access to education is what gives poor children the most leverage to get out of poverty, agreed Ricardo Paes de Barros, from the Institute of Applied Economic Research (Instituto de Pesquisa Econômica Aplicada - IPEA).
In Brazil, the poor tend to be of African descent or indigenous, be children of uneducated parents, are parents of children under age six, or live in the Northeast region.
All vulnerable groups lack education, Herrán found. The majority of poor Afro-Brazilians lack basic education, for instance, while over half of poor adults have had less than four years of education. "Schooling is the main determinant to diminish the inequality revealed by the labor markets," he stated.
Education is thus essential to reduce inequality, the experts agreed, which in turn helps reduce poverty.
It has been known for some time that economic growth is a key determinant in poverty reduction, but researchers at the seminar pointed out that poverty could be reduced faster with a social policy combining modest economic growth with modest inequality reduction.
Current social policies in Brazil tend to target the elderly and children, but not adults. World Bank expert Francisco Ferreira underlined the importance of social policies targeting workers' productivity, while Paes de Barros suggested investing in poor adults who need education and training in order to boost productivity growth and competitiveness.
According to Paes de Barros, Brazil has to choose between “privacy” and “intrusion” policy approaches. The privacy policy approach basically seeks to provide universal minimum benefits to the poor, but has no incentives to get them out from poverty; while the intrusion policy approach provides different benefits tailored to the needs of each individual household, but requires detailed information on the beneficiaries and close monitoring of them.
A privacy policy would be unaffordable in Brazil, he added. The intrusion policy is already part of the reduction poverty strategy in countries such as Chile and Mexico. Brazil has the resources to reduce poverty, agreed the experts. But to reach the poor successfully, the country has to choose the right policy and better allocate resources.