Neither Here nor There : Regionally Targeted Social Policy or Socially Targeted Regional Policy? The First Four Years of Lula’s Administration

The study presents a Leontief-Miyazawa model to study personal and regional income inequality in Brazil. The economy is divided into 21 sectors, in 5 macro regions; households are allocated into 10 income brackets. The study identifies the contribution of different sectors to inequality. The model is used to simulate the capacity of social policies to reduce personal and regional inequality in the country. The analysis is conducted using the pro-poor “Bolsa Família” program which is a social program that provides direct income transfers to poor (with per capita income between BRL 60.01 and BRL 120.00) and extremely poor households (with per capita income below BRL 60.00). The results show that in the short run, the “Bolsa Família” program has proven to produce positive results, both at the personal income level and at the regional concentration level, and has surely paid large dividends in electoral terms. Solving inequality problems, however, might require other mid and long run policies that could improve the competitiveness of lagging regions