Growth and inequality: The contrasting stories of India and Brazil

Interesting article by Alexandre de Freitas Barbosa (University of São Paulo) and Gerry Rodgers  (Indian Institute of Human Development).

They say both India and Brazil were similar during their independence, but have gone in different directions:

The development paths of India and Brazil are, in some ways, mirror images of one another. While growth and inequality were both high in Brazil until 1980 and then declined – first growth declined in the 1980s, and later inequality – the reverse is true for India. This column compares the experiences of the two countries, examining their patterns of growth and inequality and the factors that underpin them. 


Liberalisation and deregulation clearly contributed to the growth of labour market inequality in India, but this was much less evident in Brazil. A part of the difference lies in stronger institutions for the representation of workers and social protection in Brazil, which were reinforced after 2002. Also, in Brazil, the internal market was the main driver of growth. However, in neither country have trade unions effectively represented the interests of informal workers.
There are several other important contrasts between the two countries:
  • The gaps between white-collar occupations on the one hand, and casual or production workers on the other have continued to widen in India. In Brazil, the opposite has occurred due to the rapid increase in the minimum wage.
  • Regional inequality in wages and employment is large in both countries, but there is a clear difference in the trends; while this has widened in India in the last two decades, it has narrowed in Brazil. 
  • Recent reductions in labour market inequality in Brazil are quite broad-based, whether we look at differences by region, sex, or race (colour). The picture in India is much more mixed; some differentials have reduced, while others have persisted or increased. For instance, caste differentials in wages have not declined significantly in recent decades, in contrast to a fall in wage differences by race in Brazil. However, gender wage differentials have declined in both countries.
  • With respect to gender equality, though Brazil has moved faster in terms of fertility reduction, urban job opportunities and education, women workers in both Brazil and India continue to face similar challenges – how to reconcile work and family responsibilities, labour market segmentation, and social norms. A disproportionate number of women workers are found in precarious and low-quality employment in both countries.
  • In Brazil, the changes in government in recent decades have been accompanied by more substantial changes in social policy than in India, where policies have been more evolutionary (despite political rhetoric to the contrary). Brazil has progressed towards a near universal social safety net (especially through non-contributory pensions and cash transfer mechanisms). In India, social policies have been more targeted and less efficient, while conventional social security has largely been limited to the formal sector.
  • Minimum wage regulation in Brazil worked as an engine of inequality reduction because it sets an effective national floor for the income of unskilled workers. Minimum wages in India do not play the same role because they are complex, varying from region to region and from one category to another, and subject to widespread violation and non-compliance. 


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