Nova workboard

a blog from young economists at Nova SBE

Bolsa Familìa and the power of education

Extreme poverty and strong inequality have always mould Brazilian society restraining complete economic and social development. Being aware and willing to face these issues, Brazilian politicians have questioned how to improve life and condition of indigent and deprived families.

The Government started from 1980 to distribute “cesta bàsicas”, i.e. baskets of food, to the most needy families to fight poverty by direct assistance; however the program was fragile and improvements were necessary.  In 1995, Brazil benefited from a social program Rede de Proteçao Social aimed at fostering household social development, not only in the short run, but also operating progressively to improve social conditions of future generations by enhancing human capital. Following this track, Bolsa Familìa program was implemented  in 2004 by President Lula and it has being considered as the  most important Brazilian social policies and the largest anti-poverty scheme based on conditional direct cash transfer in the world according to The Economist; despite its size, the program cost less than 0.5% of Brazilian GPD.

With the aim of allowing households to overstep Brazilian poverty line, Bolsa Familìa is a means-tested benefit targeted either to extreme poverty families with monthly income per capita lower than 77R$, either to poor families, with monthly income between R$ 77,01 e R$ 154,00 with children between 0 and 17 years old. Families could have access to the program by committing themselves to enrol their children at school and guarantee 85% attendance rate for students between 6 and 15 years old and 75% for those between 16 and 17.

The program mission is fight hunger and promote nutritional and food security, eradicate poverty and any other form of household deprivation and finally promote access to public services: health, education and social assistance. Furthermore, being aware that the main reasons of low children enrolment and school attendance rate in Brazil are lack of interest (50.5%), need to work and generate income(35%) and the difficulty of access to school (13%),  the program conditionality has been addresses to tackle this specific issues. Indeed,  children’s  attendance is the guarantee for income transfer and families started to discourage drop-outs and presence of children in the labour market. Staying  longer at school would allow citizens to reach higher levels of education and to have access to better paid jobs; at the same time easier access to education would generate positive externality on low-education individuals.  It was inded the case as there was a change in both demand for education and labour supply decisions and education started to be perceived as a vehicle to step over misery and allow social changes.

Traditionally poorest areas have benefited the most from the program as its impact has not being homogenous at macro-regional level, i.e. different results have been produced depending on the economic and social characteristics of the areas involved. For example there are evidences on improvements in Maranhao State’s human development index, being for decades the State with highest illiteracy rate in Brazil. Furthermore, according to the World Bank, push in coverage of basic education changed the marked labour demand: low-skilled labour decreased and the skill premium fell, been statistically significant.

There are some concerns and criticism on the ineffective nature of eradicating inequality by implementing Bolsa Familìa  as  families participating in the program overstep the poverty line just above by a subsistence level, without the means to move up the social ladder. Furthermore, it has been said that the program is a way to maintain an equal status quo and it has led to criticism that it will generate a dependency culture.

Overall, the impact of Bolsa Familìa has been outstanding, leading to an increase of Brazilian per capita income and fostering individual social and economic stability; Brazil experienced reduction in poverty between 2003 and 2008, allowing 19 people to cross the poverty line. The essence of Bolsa Familìa relies on the understating of the importance of  human capital enhancement and the complete trust on education’s power. Bolsa Familìa’s conditionality not only have increased education awareness and demand for it, but above all have transformed the program in a long-term investment in the future, i.e. increasing overall education level in Brazil and increasing human development.

Giulia Caivano

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Author: studentnovasbe

Master student in Nova Sbe

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