Bolsa Familia: The Solution to Poverty and Inequality in Brazil

The Bolsa Familia Program is a cash transfer program that is coordinated at the federal level and targets the poorest households in Brazil. Despite the notable successes of the program, the Bolsa Familia Program has drawn the attention of supporters and critics alike. Often, a distrust of the ability of governments to alleviate poverty forms the basis for arguments against cash transfer programs such as Bolsa Familia. However, this skepticism can be set aside once the program is closely evaluated. To be certain, the program is not the panacea for poverty in Brazil. It will take multifaceted efforts to alleviate the plight of the poor in Brazil. However, the program demonstrates real potential for reducing income inequality, educational disparities, and health ailments that are suffered among the poorest in Brazilian society.

A Look at the Bolsa Familia Program

Lindert, Linder, Hobbs, and De la Briere of the World Bank provide a thorough overview of the Bolsa Familia Program (BFP) in their 2007 report “The Nuts and Bolts of Brazil’s Bolso Familia Program: Implementing Conditional Cash Transfers in a Decentralized Context.” According to the analysts, BFP is a federally operated cash transfer program that aims to reduce poverty levels while breaking the cycles of intergenerational poverty in Brazil. In order to achieve the latter goal, BFP requires participants to engage in activities that will ensure their wellbeing and social mobility, such as obtaining mandated health services and sending their children to school on a regular basis. Currently, the program transfers funds to over 11.1 million families, impacting over 46 million individuals. Further, the program is highly targeted and effective in serving the poorest members of Brazilian society. Currently, 75 percent of money transfers are made to the poorest quintile while 94 percent of money transfers are made by the bottom two quintiles. While the BFP is thought of as a single program, it is actually the product of several experimental programs that were merged into one.

As Lidert and colleagues establish, there were four primary programs that served as the basis of the 2003 development of the BFP. In 1995, local municipalities launched the Brazil Pioneer’s Program, which eventually spread to cover over 200,000 families across one hundred municipalities. The Pioneer’s program provided transfer payments to poor residents and utilized means testing in order to establish income eligibility for aid. Further, the programs required recipients of the aid to enroll their school-aged children in school and ensure that their children meet school attendance requirements. At the federal level, the Federal Bolsa Escola Program was adopted by President Henrique Cardoso in 2001 as a replacement for the municipal-run programs. Under the new scheme, poor families received transfer payments of $7 USD per child for a total of three children in exchange for a school attendance rate of 85 percent. During the same year, the Bolsa Alimentacao program was introduced to provide food stipends that would address nutritional deficiencies and high infant mortality rates among poor Brazilians. Similar to the Bolsa Escola Program, the Bolsa Alimentacao program required that aid recipients fulfill conditional obligations of obtaining pre- and post-natal medical care in exchange for funding. In addition to these programs, the 2002 Auxilo Gas administered energy subsidies to the poorest families in order to promote energy efficiencies. Finally, after introducing Fome Zero in 2003 to provide food subsidies for the poor, President Lula made the decision to combine the federally established subsidy programs. The 2003 Bolsa Familia Program, combined previous reform initiatives in order to provide income subsidies, food subsidies, energy subsidies, and health subsidies to the poor.

The Justification for Cash Transfer Programs

Critics of BFP largely hold an ideological opposition to the redistribution of resources as a method of addressing income inequality. However, a review of Brazil’s history demonstrates why this approach is vital to addressing the conditions of poverty that exist in the country. As Lidert and colleagues note, the cash transfer reforms that contributed to the Bolsa Familia Program emerged in response to debates that took place during the 1980s and the 1990s on the best ways to remedy inequality in Brazil. To an American, or even European observer, Brazil’s willingness to utilize widespread transfer programs might seem puzzling. However, public surveys demonstrate that the Brazilian population has a different perspective on the cause of poverty in their society that international observers might hold. According to an attitudinal survey, while 61 percent of Americans believe that Americans are poor because of their laziness, only 38 percent of Americans believe that injustice contributes to poverty. However, in Brazil, the reverse holds true. The same survey reveals that only 20 percent of Brazilians believe that laziness contributes to poverty in Brazilian society while 75.7 percent believe that injustice is the cause of widespread poverty. This difference in perceptions demonstrates why monetary transfer programs are a politically feasible option for Brazil.

To be certain, the economic analysis of Brazil shows inequalities that are alarming and warrant societal concern. According to Skidmore, Brazil’s Gini index was at .63 between 1970 and 1990, and inequality levels remained stagnant between the years 1960 and 1990. Further, the country was marked by severe regional inequality. The northeast part of Brazil only received a per capita income that was at 46 percent of the national per capita income. As Skidmore asserts, these disparities can be explained by the history of public policies in Brazil that redistributed economic benefits from the bottom of society to the top ten percent of society. Explaining the historical factors that institutionalized inequality in Brazil, Franko highlights that white Europeans, while making up a small percent of Brazil’s population, monopolized the country’s economic and political systems. The existence of slavery until 1888 and the adoption of low tax policies to benefit the European elites led to a system where racial and economic inequality became intertwined. Because the elites shunned public spending on infrastructure and education, the poorest members of society have traditionally been excluded from the economic advancements made in Brazil as a whole. In light of Brazil’s unique colonial legacy and the entrenched inequalities that it produced, it is entirely appropriate for the federal government to remedy these inequalities through redistributive means. As the stagnant figures from the 20th century demonstrate, inequality remained stubborn in Brazil before the government took progressive measures to address the conditions faced by the poor in order to fuel Brazil's economic growth as a whole.

The Success of the Bolso Familia Program

Not only is the BFP historically justified, but it has also been proven to be highly successful in alleviating income inequality and improving educational attainment among the poor. As Soares, Ribas, and Osorio note, income inequality is an especially important metric for middle-income countries such as Brazil because changes to inequality levels rather than average income tends to impact overall poverty levels in a country. Further, Soares and colleagues point out that the Gini index for Brazil fell by 4.7 percent between 1995 and 2204, with the BFP accounting for 21 percent of this decrease. Evidencing the importance of BFP cash transfers in alleviating income inequality, it is estimated that the poorest 5 percent of Brazilians rely on monetary transfers for 10 percent of their income. For poor Brazilians, BFP transfers are the second most important source of household income, following wages from labor. However, another significant aspect of the BFP is that these transfers are highly efficient. When the entire Brazilian population is taken into account, transfers only account for .5 percent of total Brazilian household income. Thus, the program has the effect of providing critical aid to the poorest members of society while preventing a saturation of monetary transfers distributed to Brazilian households.

The second benefit of the BFP is that it improves educational outcomes for children of aid recipients. From its inception, the BFP has required aid recipients to enroll their children in school as a primary condition of aid. According to Glewwe and Kassouf, the 2001 enrollment rates in Brazil among 15-year olds was only 87 percent, meaning that 40 percent or 9 million young people between the ages of 18 and 25 had less than 8 years of formal education. However, following the 2003 enactment of the BFP, enrollment was increased by 5.5 percent for children between grades 1 through 4. Further, enrollment was increased by .04 percent in children between grades 5 through 8. Additionally, Glewwe and Kassouf found that the program decreased inequalities in educational attainment between children of disadvantaged racial backgrounds. BFP is significant in reducing poverty in the long term because it provides an important incentive for parents to ensure the education of their children so that they can obtain skilled jobs or pursue higher education.

The one drawback of the BFP has been in its ability to produce positive health outcomes for aid recipients. As Soares and colleagues note, the BFP has had no impact on child immunizations and has failed to ensure that recipients comply with the mandates to receive frequent check-ups. However, the researchers also assert that the limited access that the poor have to health resources is the main contributor to these low levels of compliance. While critics might point to the continued health disparities as a program failure, they should be viewed as an area where improvement is needed. Moving forward, Brazil must determine how it can increase access to health care resources to the poor.

Despite its shortcomings in ensuring healthcare access, BFP has been largely successful in reducing income inequality and improving educational attainment among the poor in Brazil. Though international observers might object to the utilization of transfer programs to remedy poverty, this approach has significant merits in Brazil. In consideration of Brazil’s unique history with colonialism and racial inequality, proactive measures to remedy historical injustices is strongly supported by the Brazilian public. In order to continue its successes, the BFP should be continued in order to bridge the gap between the poor and wealthy in Brazilian society.

Works Cited

Franko, Patrice. The Puzzle of Latin American Economic Development. 3rd ed. New York: Rowman & Littlefield Publishers, Inc., 2007. Print.

Glewwe, Paul, and Ana Lucia Kassouf. The Impact of the Bolso Escola/Familia Conditional Cash Transfer Program on Enrollment, Dropout Rates and Grade Promotion in Brazil. Journal of Development Economics 97.2 (2012): 505-517. ScienceDirect. Web. 14 Nov. 2013.

Lindert, Kathy, Anja Linder, Jason Hobbs, and Benedicte de la Briere. The Nuts and Bolts of Brazil’s Bolso Familia Program: Implementing Conditional Cash Transfers in a Decentralized Context. Washington, DC: The World Bank, 2007. Web. 14 Nov. 2013.

Skidmore, Thomas E. "Brazil's Persistent Income Inequality: Lessons from History." Latin American Politics and Society 46.2 (2004): 133-50. ProQuest. Web. 17 Nov. 2013.

Soares, Fá, Rafael Perez Ribas, and Rafael Guerreiro Osório. "Evaluating the Impact of Brazil’s Bolsa Familia: Cash Transfer Programs in Comparative Perspective." Latin American Research Review 45.2 (2010): 173,190,268-269,272-273.ProQuest. Web. 15 Nov. 2013.