Inequality in Brazil: a study about income convergence

Abstract

Brazil is internationally known by its deep regional income disparity. The objective of this paper is to identify the determinants of the federative units per capita income growth and to verify if there are indications of conditional convergence of the per capita income growth rate. The analysis was based on panel data about all the federative units in the periodo of the 1995-2002, and the presence of heterogeneity was considered by using Fixed Effects Model. The results indicate evidences of the existence of conditional convergence of the per capita income growth rate. Moreover, the banking credit and the government investment are determinants of the federative unit per capital income growth.