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a blog from young economists at Nova SBE

Bolsa Familia – The magic program for poverty reduction?


“If at the end of my term every Brazilian person has three meals per day, I will have fulfilled my life’s mission,” said the former Brazilian president Luiz Inacio Lula da Silva. Thus, Lula initiated the conditional cash transfer program called “Bolsa Familia” when he became president in 2003. Bolsa Familia provides monetary benefits to poor households with school-aged children, which fall below an extreme poverty line. The poverty line is based on the price of a basket of basic goods in one’s region. In order to receive the benefits a regular child school attendance as well as a participation in health care programs is mandatory. In case the child misses out on more than 15% of the classes, the payment is suspended. The objective of the program is to break the intergenerational poverty cycle. At the moment families in need receive about 22 Reais (12$) per child on a monthly basis. The total annually amount spent on the program accounts for 0.5% of the Brazilian GDP. Meanwhile Bolsa Familia is the largest program of effective social policy in the world and was adapted by more than 20 countries. Nowadays the Brazilian program serves 41 million people, which account for 22% of the Brazilian population and was so far able to take 21 million Brazilians out of extreme poverty. According to the IPEA’s poverty lines, the poverty headcount index fell from 35.8% in 2003 to 21.4% in 2009.

Having a deeper look into the distribution of the cash transfers among the poorest, it can be seen that the participating households in the program were mainly from rural areas. The participation rate of households living in the major cities like Sao Paulo and Rio de Janeiro was less than 10%. Knowing that nowadays 46.7% of the people living in extreme poverty are from rural areas and 53.5% from urban areas, raises the question if Bolsa Familia favors the support of households living in rural areas and creates inequality among the poorest in the Brazilian society. In this context, it is often criticized that the program does not address sufficiently the imbalance of living costs. Thus, households in urban areas receive a lower monetary benefit compared to the ones in rural areas. Living costs in Sao Paulo are more than twice the costs of living in rural areas in the Northeast. According to Rocha (2008) is the poverty line in rural areas in the Northeast at a value of 64.47 Reais per month while people in Sao Paulo, who earn less than 250 Reais on a monthly basis are considered to fall below the poverty line. This shows clearly the difficulties the program has to help poor families out of extreme poverty in the main cities of the country through its cash transfers. Apart from the disparity in the costs of living in urban and rural areas, it is more likely that children live in cities, which are economically incentivised to drop out of school and enter into child labour. At that point it should be mentioned, that out of the 13.000 households, which lost the conditional cash transfer due to low school attendance, the majority of the households lived in Sao Paulo. Children in urban areas have more job offers and see a higher benefit in leaving the program than it is the case for children in rural areas. Children living in rural areas are more likely combining work and school as they work more often in the agriculture sector, which depends on the seasons and is better compatible with the required school attendance rate. Bolsa Familia addresses old poverty problems while providing children with adequate access to education and health care. New poverty problems like violence, drug addiction, family breakdowns and environmental degradation, which are more likely problems children are facing in cities, are not addressed by the conditional cash transfer program.

The disparity of living costs in rural and urban areas, the child labour and the new poverty problems show clearly that Bolsa Familia is not the ultimate “magic” program to reduce poverty in an equal way. Bolsa Familia was initially implemented to incentivize poor households in rural areas as they were disadvantaged by several social benefit programs in 1990s. Further, the program had a great impact on the poverty reduction in Brazil, nevertheless the government should adapt the program according to the recent circumstances. Therefore, the program should implement conditions linked to the new poverty problems and it should provide families especially in urban areas with equal chances to escape from the intergenerational poverty cycle.

Sandra Kusterer #2711


Author: studentnovasbe

Master student in Nova Sbe

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