A Reversal in Shared Prosperity in Brazil - Brazil’s Poverty and Inequality Since the 2014-2016 Domestic Crisis - Report No. 1 - July 31, 2020

Jul 19, 2026

The report analyzes how Brazil’s 2014–16 domestic crisis reversed earlier gains in shared prosperity, poverty reduction, and inequality control. It uses household data for 2012–2019 to assess crisis severity across income groups and the uneven, slow recovery after the downturn. Findings show extreme poverty surged, recovery did not reach the poorest by 2019, and inequality increased sharply from 2016 onward. Post-crisis unemployment and weaker labor outcomes, especially for men, drive much of the rise, while pension income mitigates impacts.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages15

Reading Time38 min

AccessFree to download

Introduction

Poverty and inequality dynamics since the 2014-16 crisis

Shared prosperity reversal and regressive income growth

Labor market and social protection mechanisms

Public Disc losure Authorized A Reversal in Shared Prosperity in Brazil REPORT NO. 1 JULY 31, 2020 Pub lic Disc losure Authorized Brazil’s poverty and inequality since the 2014-16 domestic crisis 1 Authors: Matias Ciaschi, Rita Damasceno Costa, Rafael M. Rubião, Anna Luisa Paffhausen, and Liliana D. Sousa INTRODUCTION The COVID-19 pandemic arrived in Brazil while the poorest 40 percent of the population was still recovering from the 2014-16 crisis. After boosting Latin America’s reduction in poverty and inequality for the previous decade, Brazil’s 2014-16 crisis and recovery are a stark departure from the previous decade as Brazil’s inclusive growth turned significantly regressive. As millions of jobs were lost, Brazil’s expansive social protection system was unable to effectively serve as a countercyclical protection system. This note analyses the recently released household data from 2012 through 2019 to better understand the severity of the 2014-16 crisis across income groups, as well as the uneven and slow recovery experienced following this crisis2. The analysis shows that, during the domestic 2014-16 crisis, Brazil was unable to replicate its earlier successful protection of welfare as over 4.6 million Brazilians fell into extreme poverty between 2014 and 2017. Poverty rates grew from 22.8 percent in 2014 to 23.8 percent in 2016, while extreme poverty grew from 5.6 percent to 7.7 percent between 2014 and 2017. As of 2019 the recovery had yet to reach the poorest -this tendency of crisis-level poverty rates to resist the recovery is found throughout the five regions of Brazil until 2018. As of 2019, the income of the poorest 40 percent remained below its pre-crisis level. A sharp reversal in shared prosperity3 during the crisis and regressive income growth has fueled the increase in poverty and inequality. Between 2014 and 2019 the income of the poorest 40 percent fell at an annualized rate of 1.4 percent. During this period, the income of the average Brazilian grew by 0.3 percent per year. From its lowest levels since the twenty-first century, inequality rose sharply in 2016, when inequality grew by 1.5 Gini points in one year – the largest single year jump in inequality since at least the early 1990s – and continued to grow until 2018. All told, the Gini coefficient grew from a low of 52.5 in 2015 to 55.0 in 2018. If income growth during this period had been evenly spread 1 This brief includes both internationally comparable indicators and indicators based on the official income aggregate, as defined by IBGE, that are not internationally comparable. 2 Due to a methodological change in the survey series published by IBGE, there has been a limited understanding of the full impact of the 2014-16 economic crisis in Brazil. In October 2019, IBGE published the comparable income series from 2012 through 2018, allowing for a first look at the poverty, inequality, and shared prosperity trends during this critical period. The data for 2019 were published in May 2020. 3 Shared prosperity is an indicator defined as the income growth of the poorest 40 percent. across the income distribution, there would be 13 million and 9 million fewer Brazilians living in moderate and extreme poverty in 2019, respectively. Brazil’s post-crisis unemployment is a significant challenge, increasing extreme poverty and inequality. In particular, men’s lower employment rates and lower earnings even when employed explain about three-quarters of the increase in extreme poverty and inequality. On the other hand, of Brazil’s social protection system, only pension income – likely related to non-contributory programs targeting former workers in both urban and rural sectors -appears to have served to reduce the increases in poverty and inequality. To avoid an exacerbation of these trends under the current pandemic crisis, it is important to understand the labor market and social protection mechanisms which failed to protect the lowest

FAQs

What changed in Brazil during the 2014-16 crisis regarding poverty and extreme poverty?

Brazil experienced a major setback: over 4.6 million people fell into extreme poverty between 2014 and 2017. Poverty and extreme poverty rates rose from 2014 levels through the crisis period.

How did shared prosperity and income growth differ between 2014 and 2019?

Shared prosperity reversed sharply during the crisis, with the poorest 40 percent’s income falling at an annualized rate of 1.4% from 2014 to 2019. Meanwhile, average income growth for the overall population remained much lower and regressive.

What factors after the crisis explain increases in extreme poverty and inequality?

Post-crisis unemployment is identified as a key challenge. Lower employment rates and lower earnings even among employed men explain about three-quarters of the rise, while pension income is one social protection channel that appears to reduce increases.

Jul 19, 2026

Upload by Seraphina