Growth and distribution in Brazil the 21st century: revisiting the wage-led versus profit-led debate

Produced by: 
University of Sao Paulo
Available from: 
September 2015
Paper author(s): 
Laura Carvalho
Fernando Rugitsky
Topic: 
Poverty - Inequality - Aid Effectiveness
Year: 
2015

In the 2000s, several Latin American economies, and Brazil in particular, have engaged in relatively successful attempts to combine higher economic growth and lower income inequality. As the Brazilian economy slowed down in the last few years, the sustainability of this growth model has been put into question. After studying the impact of different redistributive policies (like minimum wage and income transfers) on the personal and functional distributions of income in Brazil, the paper discusses the response of aggregate consumption, investment and net exports – as well as of the economy’s productive structure and inflation rate – to the changes in income distribution itself and other relevant factors. The analysis allows us both to draw lessons to the Neo-Kaleckian literature on demand regimes, pointing towards the importance of some theoretical extensions, and to examine future prospects for the Brazilian economy.

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