Poverty in Brazil stems not so much from the low level of average income as from the existence of very strong inequalities. Education, as in other countries, is the best tool for improving social mobility. Nevertheless, while the income “yield” from education in Brazil is high compared to other countries, it has diminished over the last two decades. The interaction of structural reform and low growth have weakened parts of the middle class. For poverty rates to fall, growth has to be stronger, and more effective social policies need to be implemented than was previously the case. The strategy of the Lula government to reduce poverty is based on greater conditionality of aid at the individual level and the tighter targeting of the redistribution policy. This may lead to tensions with alternative demands for consolidating the existing social security system, centred on the salaried middle classes.
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