Reformulation of income transfers in Brazil: simulations and challenges by Luís Henrique Paiva, Letícia Bartholo, Pedro H. G. Ferreira de Souza and Rodrigo Octávio Orair published by International Policy Centre for Inclusive Growth (2021).
“The debate around the reformulation of the Brazilian federal government’s cash transfers precedes the COVID-19 pandemic (see, for example, Portella et al. 2016; Soares, Bartholo and Osorio 2019), but it has grown significantly in the wake of the health crisis and the creation of the Emergency Grant (Auxílio Emergencial) by Law No. 13.982/2020. To contribute to this discussion, the goal of this Working Paper is to present simulations for the future of noncontributory transfers in Brazil, discussing the dilemmas of various designs, and estimating costs and possible impacts on poverty and inequality. We also analyse a series of operational and budget-related challenges to implementation.
Our simulations involve three different transfer models: a) targeted—that is, focusing on the poorest population; b) universal—paid to the entire Brazilian population; and c) hybrid— combining a universal component for children and adolescents and a targeted component for poor adults. Each model was calculated under three distinct budget scenarios: the most modest one is of BRL58 billion per year, which would be fiscally neutral—that is, it could be implemented using funds from existing programmes. The most generous one is of BRL180 billion per year, which would increase Brazilian expenditures with this type of programme to levels that can be observed in countries of the Organization for Economic Cooperation and Development (OECD). The midrange scenario is of BRL120 billion, a compromise between the two extreme ones…”
