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