Guimarães, Pedro Herculano de Souza, Ferreira Osorio, Rafael Guerreiro
Year of Publication:
Texto para Discussão, Instituto de Pesquisa Econômica Aplicada (IPEA) 1648
This paper aims to describe the ongoing process of regional convergence among Brazilian metropolitan areas and the rest of the country, examining its main reasons and highlighting its importance to the overall decline in income inequality. Our analysis shows that, since the early 1980's, per capita real incomes grew faster in non-metropolitan areas, which were propelled by a booming labor market which accounted for over 60% of the growth. On the other hand, about two-thirds of the income growth in metropolitan areas was caused by the expansion of Social Security benefits. Between 1981 and 2009, the decrease in inequality between metropolitan and non-metropolitan areas accounted for 51% of the total decrease in income inequality; between 1995 and 2009, 20%. Had this convergence not occurred, per capita income inequality in 2009 would be 10% higher than observed.