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Exchanging Data and Skills in Place inequality:
UK and Brazil
Marta Arretche
University of São Paulo
Center for Metropolitan Studies
Some preliminary remarks
• Brazil is data-rich:
– Data is available and free
– Plenty of data available:
• Annual Census on Municipalities (Brazilian Institute on Geography and Statistics – IBGE)
– administrative capacities
– policies implemented
– Detailed supplement
– Welfare, education, health, security, housing, urban development, etc
• Annual publication of Municipalities’ Account (Secretary of the National Treasury)
– Data is highly disaggregated: revenue (tax and transfer) and spending (by function and subfunction)
• Policy-specific datasets (by Ministry, yearly basis)
• Outcomes (facility conditions, coverage, enrollment)
• Outputs (health conditions, school performance, poverty rates)
Some preliminary remarks
• Commitment to place-inequality reduction:
– Most transfers are constitutional or legal: some form of revenue-sharing
↓ tends to generate lock-in situations
↓ homogeneous and universal rules tend to prevail
– room for negotiated grants is smaller (although it does play a political role)
– the conception of “need” is based on size and GDP
↓ the smaller and the poorer (GDP), the needier
• Municipalities came to be the main providers of basic services (directly coordinated by
the Union)
A measure of need:
GroupNumber of
Municipalities
% Total
PopulationCharacteristics
1 2,225 64.6
Urban, lowest rates of poor (19%); best health, education, and urban
infrastructure indicators
2 1,011 13.4
Urban, high rates of poor (42%); much worse sewage collection
conditions
3 287 2.7
Half urban (58%), high rates of poor (57%); much lower schooling
indicators, worst urban service condition
4 1,063 11.5
Half urban (58%); high rates of poor; worst health and education
conditions
5 703 6.0 Rural (44%); very high rates of poor (75%); very bad social conditions
6 217 1.7
Rural (36%); very high rates of poor (80%); worst social conditions;
lack of infracstructure
Source: CMS Municipality Databank
Graph 1
Relationship between poor concentration and groups
Brazilian municipalities
00
10
20
30
40
50
60
70
80
90
100
0 1 2 3 4 5 6 7Groups
Po
or
pe
op
le c
on
cen
trat
ion
s
0 a 20mil
20 a 50mil
50 a 100mil
100 a 500mil
500mil a 1mi
mais de 1mi
Graph 2
Brazilian MR's municipalities according to SES indicators
0%
20%
40%
60%
80%
100%
Bel
ém
Fortal
eza
Rec
ife
Sal
vador
Goiâ
nia
RID
E D
istrito
Fed
eral
Bel
o Hor
izont
e
Rio
de
Janei
ro
São
Pau
lo
Cur
itiba
Por
to A
legre
Grupo 1 Grupo 2 Grupo 3 Grupo 4
National policies towards place-equality
Revenues: three-layers of regulation
1. Local government tax-raising powers
Subnational governments are limited to define the rate of their own taxes
the authority to define the tax base of subnational governments isexclusive to the central government
2. Constitutionally-based transfers:
- from the federal government to all municipalities: compensation
- from the states to their own municipalities: rebates/devolution
3. Universal earmarked transfers in redistributive policies (health and education)
Graph 3 - Average Per capita Revenues by source
All Brazilian Municipalities- 1996-2006
0
10 0
2 0 0
3 0 0
4 0 0
50 0
6 0 0
70 0
8 0 0
9 0 0
10 0 0
110 0
12 0 0
13 0 0
14 0 0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
R$ P
er
cap
ita
Tax revenues
TR + Const. Tr
TR + ConsTr + Health/Education Transfers
TR + All transfers
Total Revenues
A disagregated measure of place-
inequality reduction
0,200
0,250
0,300
0,350
0,400
0,450
0,500
0,550
0,600
0,650
0,700
1 2 3 4 5 6 7 8 9 10 11
Co
efi
cie
nte
de
Gin
i
Self-Generated SG + State transfers
SG + Federal transfers SG + Univ Cond Transfers AR + Other transfers
Graph 4 - Per Capita Revenue Inequality by Source
All Brazilian Municipalities - 1996-2006
Graph 5 - Relationship between Groups and Percapita
Revenues
All Brazilian Municipalities
0
1
2
3
4
5
6
7
00 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500
Average Percapita Revenues - 1998-2002
Gro
up
s -
20
00
0 a 20 mil
20 a 50 mil
50 a 100 mil
100 a 500 mil
500 mil a 1 milhão
mais de 1 milhão
The impact of each source on self-
generated revenues
Revenue Inequality by Source
Brazilian Municipalities - 1998-2008
0,100
0,150
0,200
0,250
0,300
0,350
0,400
0,450
0,500
0,550
0,600
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Co
efi
cie
nte
de G
ini
SF + FedConstTra SF + StateConstTran
SF + Educaion + Health SG + Oil
National policies towards place-equality
• Expenditures:
– Constitutionally earmarked local government expenditures
• education policy:
1998-2006: states and municipalities should spend at least15% of their overall revenues on primary education
60 % of such expenditure should be used entirely to payteachers actually teaching
from 2007 on: states and municipalities should spend atleast 20% of their transfers on basic education
national wage floor for teachers
• health policy:
since 2000: municipalities should spend 15% of their totalrevenues on health
since 2000: states should spend 12% of their totalrevenues
National policies towards place-equality
• the scope for local decision-making autonomy on expendituresis policy-specific
– large in developmental policies (urban infrastructure and transport)– large: culture, recreation and sports policies– limited in redistributive policies (health and education)
• education:– constitutionally earmarking of expenditures
• health:– federal universal earmarked transfers (attached to
policies)– constitutionally earmarking of expenditures
Municipalities’ share of redistributive expenditures 1996-2006
Municipalities’ share of developmental expenditures 1996-2006
MR’s Municipalities Share of Health Expenditures – 2006
MR’s Municipalities Share of Education Expenditures – 2006
MR’s Municipalities Share of Urban Infra-structure Expenditures –2006