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Spike in Unemployment Leads to Rising Inequality in Brazil

06/20/2016 - 10h51

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MARIANA CARNEIRO
FROM SÃO PAULO

Rising unemployment has had an adverse effect on income distribution in Brazil. After years of steady decline, inequality -the income gap between rich and poor- rose greatly during the first trimester of this year.

This trend is the subject of USP professor and social policy expert Rodolfo Hoffman's research, which used IBGE (Brazilian Institute of Geography and Statistics) data to study the impact of job shortages.

Since the start of suspended president Dilma Rousseff's second term, in 2015, inequality between those who make up the workforce (unemployed and employed) increased nearly 3 percent.

This is significant for an indicator that typically sees little change over time. During that period, the unemployment rate rose from 7.9 percent to 10.9 percent.

The finding is based on data from Pnad (Brazilian National Household Sample Survey), which began in 2012. The survey captures income patterns in the labor market and does not take into account income received from other sources, such as retirement, pension and rent.

Therefore, if an individual has lost employment income, according to this study, his or her income drops to zero - even if there is a possibility that they could receive public assistance or government benefits.

Unemployment insurance and FGTS (Employee Indemnity Guarantee Fund), both temporary, are also not taken into account.

The most refined metric available to calculate inequality is income divided by the number of individuals in a household, however, this data is only released by the IBGE once a year in September.

To avoid remaining in the dark, experts often rely on employment income as a marker.

Translated by SUGHEY RAMIREZ

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