Sample Essay on Income Inequality in Brazil

Brazil is one of the countries with the highest level of income inequality in the world today. However, the inequality has significantly dropped in the last sixteen years. This decline was because of various factors. Since 1996, when Brazil ended the hyperinflation, it has always protected the poor from inflation tax, which has helped reduce the gap between the poor and rich even though to a smaller extent.

From 1999 to 2002, Brazil experienced consistency in the dropping levels of income inequality despite the fact that were on discrete basis. In 2003, the new government of Lula helped in reducing the inequalities further by implementing the minimum wage real policy. It also implemented other programs like the Bolsa Familia, also known as the Family Grant program. These policies led to a significant drop in inequalities between the rich and the poor.

Besides the Family Grant program, and the increase in minimum wage policies, Brazilian labor market has also experienced tremendous growth. Some economists argue that these improvements in the market are responsible for the drop in income inequalities among Brazilians of different classes. For example, students spend more years schooling because of the improved higher education. In 2012, Brazil registered a decline in unemployment rates from 13.2% in 2003 to 6%.

On the other hand, the informal labor market shrunk from more than 34.4% in 2004 to about 23%. This was an indicator of improved training opportunities, as the country no longer relied on the informal labor. In 2012, there was high level of labor formalization as some of the people trained and working in the informal sector shifted to the formal labor force. This shows how various factors led to the reduction of income inequity in Brazil especially at the turn of the 21st century.

Like in many countries, especially developing economies, the minimum wage plays a major role in determining the gap between the rich and the poor. Where the minimum wage is too low or does not exist, the gap is likely to be striking as opposed to where there a policy guiding the issue. Over the last 18 years, the minimum wage of Brazilians has increasing resulting into an increase in the purchasing power as people had slightly reasonable income to spend on essential goods and services. Between 1995 and 2009, Brazil had a minimum wage real of 89%. In 2009, the minimum wage represented about 40% of the average wage. The idea to increase minimum wage worked for Brazil because of the looming inflation at that time.

As noted above, the Bolsa Familia equally played a role in reducing income inequality in Brazil. This is a government program that allows poor people to access money with fewer restrictions. Here, the main condition imposed on the poor is ensuring that children remain in school regardless of the hard times. Additionally, the average value of every gain is low and the program is focused to dealing with the problem of wealth disparities. In some cases, the Brazilian government locates and transfers resources to poor citizens with low administrative costs. This makes them independent and improves their living standards.

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