Static and dynamic decompositions of income inequality in Brazil

Jeronimo O. Muniz, Universidade Estadual de Campinas (UNICAMP)

The objective of this article is twofold. It first describes how population and income shares have changed for the Brazilian poor, middle and rich classes in 1980, 1991 and 2000. Second, it investigates how population and income shares have combined to generate total inequality in Brazil during the same period. Total inequality is decomposed to assess the contribution of the inequality prevailing within and between the poor, middle and rich classes. In particular, the article answers the following questions: 1) What is the contribution of the poor, middle and rich classes to total inequality? 2) What factor has contributed the most to changes in total income inequality: changes in population distribution, changes in income allocation, or changes in inequality within the groups? The article disentangles the importance of population growth from the importance of income distribution between and within subpopulations in the generation of income inequality in the total population.