Employment and Inequality of Outcomes in Brazil

Abstract

After a couple of decades with very volatile macroeconomic conditions and high levels of inequality, growth in the new century in Brazil has been able to generate jobs at an increasing rate. This has led to a decline in unemployment and in informality, despite an increasing labour force participation rate. The increasing human capital accumulation, coupled with the amplification of conditional cash transfer programs, like Bolsa-Familia, has led to a steady fall in inequality, for the first time in decades. This evidence suggests that, after a period of adjustment to the trade liberalization and privatization reforms, Brazil has found a stable path of development. In order to continue in this positive path, despite the recent global economic crisis, Brazil has to continue expanding the education of its workforce, improve the Bolsa-Família program, so that the recipients can find a way out of poverty through participation in the labour market, and promote institutional reforms to speed up the process of creating new firms, reduce the tax burden levied on the small formal firms and speed up the labour market reforms to make the hiring of formal employees less expensive in Brazil.