A New Contract: Brazil’s Dual Social Protection System

A New Contract: Brazil’s Dual Social Protection System

Among developing countries, Brazil is increasingly seen as a model for social development. Its achievements over the past two decades are impressive. The share of the population living in extreme poverty fell from 16.4 percent in 1995 to 4.7 percent in 2009. Inequality as measured by the Gini coefficient fell more than 10 percent in the same period, to 0.53, where 0 represents perfect equality of income distribution and 1.0 perfect inequality. Growth has been an important driver for these trends, particularly because over the past decade Brazil’s growth has been distinctly pro-poor: Personal income among the poorest 10 percent of the population has grown more than twice as fast as that of the wealthiest 10 percent. It is not surprising that low- and middle-income countries look to Brazil for inspiration.

Social policies, and especially social protection policies, are the key to explaining Brazil’s successes. Education and health reforms initiated in the mid-1990s raised public expenditure per student and created a national health care system. In terms of social protection, the policy focus has been on reaching a majority of the population left outside of established social insurance schemes. This has been achieved through a significant expansion of social assistance programs providing income transfers to families in poverty. The flagship program, Bolsa Familia, links cash transfers to school attendance and primary health care among participating families. Studies show that social assistance programs have contributed significantly to the decline in poverty and inequality in Brazil. However, these developments have resulted in a dual social protection system, with social insurance covering one half of the population and social assistance covering the other half.

Brazil’s New Social Contract

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