The Impact of Pensions and Private Transfers on Rural Poverty in Brazil

Abstract

Combining different data sources to create a balanced panel of rural state units of analysis, we estimate the impact of pensions (public) and inter-household (private) monetary transfers on the dynamics of rural poverty in Brazil between 1996 and 2015. We combine data from the Brazilian National Household Survey and administrative data from State Statistics Bureaus, in order to estimate a Generalized Method of Moments-System dynamic panel model for poverty. Controlling for demographic composition, GSP (Gross State Product) agricultural share, GSP share to GNP (Gross National Product), educational attainment, unemployment rate, and land concentration, we focus on how pensions and inter-household transfers, as well as their interaction, affected the dynamics of poverty in the rural contemporary Brazil through an increase in the investment capacity of households. Our results show a significant and positive impact of both transfers on poverty dynamics, with scale dominance for the retirement income. Despite controls used, poverty persistence is still significant in contemporary rural Brazil, suggesting that both transfers, even when combined, are limited to fight the structural component of poverty.

Keywords

• Poverty
• Dynamic GMM-system panel model
• Public transfer
• Private transfer
• Rural Brazil