The Dynamics of Poverty and its Determinants: The Case of the Northeast of Brazil and its States

Abstract

In the northeast region of Brazil, the poverty picture of the past two decades reveals large fluctuations in the poverty level and poverty depth. Findings based on the Brazilian annual household survey (Pesquisa Nacional de Amostra Domiciliar, PNAD) datasets from 1981-99 reveal that individual characteristics such as education, experience, and labor market association of the household head are important correlates of poverty. Taking these into account, data reveal that a Nordestino (northeasterner) is 24 percentage points more likely to fall below the indigent poverty line than other Brazilians. Analyses also reveal large differences in poverty levels by education, and these differences have increased over time. Fiess and Verner observe that the probability of being poor is decreasing with increasing educational attainment. The gender of the household head does not matter for poverty, according to the poverty profile. But when the authors control for education and other individual characteristics, female-headed households have a much larger likelihood of being poor than male-headed households. Household size also matters for poverty. Larger households are more likely to experience poverty than smaller households, and the effect is concave. Moreover, households with children under age 5 appear more likely to fall below the poverty line than families with no children below age 5. The presence of old-aged people (above 65 years) in the household is an important factor contributing to poverty reduction.

This paper - a joint product of the Office of the Chief Economist and the Social Development Family, Latin America and the Caribbean Region - is part of a larger effort in the region to better understand poverty and its determinants in Brazil.