Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/249219 
Year of Publication: 
2021
Series/Report no.: 
Texto para Discussão No. 2701
Publisher: 
Instituto de Pesquisa Econômica Aplicada (IPEA), Brasília
Abstract (Translated): 
This study aims to present microsimulations of the future of non-contributory social transfers in Brazil, discussing trade-offs of benefit designs, estimating costs and impacts on poverty and inequality and assessing operational and budgetary issues. We simulate the adoption of three different non-contributory benefit models: a targeted model, paid to the poorest; a universal model, paid indistinctly to all Brazilians; and a hybrid model, combining a universal child benefit with a targeted benefit paid to adults. Each of these models are simulated under three budgetary scenarios: BRL 58 billion a year, BRL 120 billion a year and BRL 180 billion a year. In all nine model/budget combinations, there is a substantial increase in the coverage, compared to the coverage currently observed for the Bolsa Familia Programme. Our simulations suggest the models that are strongly progressive (the targeted and the hybrid models) are more efficient to reduce poverty and inequality than universal transfers. The hybrid model presents results close to those estimated for the targeted model and has the advantage of providing coverage to a public that is frequently at risk of poverty (children and adolescents). This study also assesses the operational issues that would need to be faced to increase the coverage, vis-à-vis the Bolsa Família Programme, as well as the difficulties to finance this expansion from a budgetary perspective, even in our lowest budgetary scenario. More generous budgetary scenarios could be financed through the creation of a modern Value-Added Tax (VAT), such as proposed by the Tax Reform in exam by the Congress, and occasional increase in effective tax rates of the income tax paid by the rich.
Subjects: 
inequality
poverty
cash transfers
JEL: 
I3
D31
I38
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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