Poverty Reduction in Brazil: what is behind the decline during the 2000s?

Following a macroeconomic stabilization and consistent economic
growth during the 2000s, Brazil experienced a continuous decrease on poverty
incidence for the first time in its contemporary history. While the literature
emphasizes the importance of economic growth alongside social development
to fight poverty, the Brazilian experience also displays strong government
action through expanding social coverage targeted to the poor. Considering a
scenario where all factors are observed simultaneously, this study aims to shed
light on the poverty dynamics during Luiz Inácio Lula da Silva’s presidential
term. Specifically, this study explores which factor has contributed the most
for poverty reduction: the sectoral composition of growth, the public spending
or the general improvement in the socioeconomic context. The findings
suggest that inequality reduction alongside the increase in human capital
attainment were the most important factors behind poverty decline followed
by economic growth, especially through the tertiary sector. Government
expenditures played a marginal role through education and health while federal
cash transfers did not provide any significant effect.