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Empirical Economics

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01-06-2014

More equal but not so fair: an analysis of Brazilian income distribution from 1995 to 2009

Authors: Erik Figueiredo, José Luis da Silva Netto Junior

Published in: Empirical Economics | Issue 4/2014

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Abstract

This study measures unfair inequality in Brazil between 1995 and 2009. To achieve that, we used the statistical tool developed by Almås et al. (J Public Econ 95:488–499, 2011) and the concept of “responsibility-sensitive” fairness proposed by Bossert (Math Soc Sci 29:1–17, 1995), Konow (J Econ Behav Organ 31(1):13–35, 1996) and Cappelen and Tungodden (Fairness and the proportionality principle, Discussion paper SAM 31/2007. Norwegian School of Economics and Business Administration, 2007). The results indicate that the fairness level in Brazil remained unchanged throughout the analyzed period.

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Most of these changes occurred after the second half of the 1990s. For further details on income distribution and poverty, see Neri (2006).

A criticism about this view is that inequality is not necessarily offensive or inoffensive; it can be just spurious. For this argument, see Formby et al. (1989).

Let \(C_{i}=\exp (\beta r_{i})\) and \(D_{i}=\exp (\gamma e_{i}+\epsilon _{i})\) , so \(f(r_{i},e_{i})=C_{i}D_{i}\). Then \(g(r_{i})/\sum _{j}g(r_{j})=n^{-1} \sum _{j}C_{i}D_{i}/(\sum _{h}n^{-1}\sum _{j}C_{h}D_{j})=C_{i}\sum _{j}D_{j}/ \sum _{h}C_{h}\sum _{j}D_{j}\). Since \(\sum _{j}D_{j}\) is a constant, this simplifies to \(C_{i}/\sum _{h}C_{h}\) (Almås 2008).

Based on the axioms of anonymity, scale invariance, generalized Pigou–Dalton and unfairism.

Calculated for \(y_{i}\ge 0,\forall i\). The unfairness Gini index can also be calculated from \(G^{U}={\frac{2}{n(n-1)\mu }}\sum _{i}iu_{i}\), which simplifies the computational procedure.

Denominated in 2009 Reais as in the deflation method proposed by Corseuil and Foguel (2002).

Defined as whether the observed municipality of residence is different from the one in which the individual was born.

Discussions related to the effects of causal equations in income can be found in Belzil and Hansen (2002), Cruz and Moreira (2005), and Fernández-Kranz et al. (2011), among others.

We thank an anonymous referee for this observation.

Categories: (1) Lower Bottom: agricultural laborers, fishermen, lumberjacks, etc.; (2) Upper Bottom: blue-collar workers, janitors, security guards, etc.; (3) Middle Bottom: masons, electricians, joiners, etc.; (4) Middle Middle: regional sales representatives, traveling salespersons, low-level managers, etc.; (5) Middle Top: consultants, high-level managers, CEOs, etc.; and (6) Top: large owners, magistrates, university-level professionals, etc.

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Title: More equal but not so fair: an analysis of Brazilian income distribution from 1995 to 2009
Authors: Erik Figueiredo
José Luis da Silva Netto Junior
Publication date: 01-06-2014
Publisher: Springer Berlin Heidelberg
Published in: Empirical Economics / Issue 4/2014
Print ISSN: 0377-7332
Electronic ISSN: 1435-8921
DOI: https://doi.org/10.1007/s00181-013-0714-5

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