Poverty and Regional Differences: An Empirical Analysis for Brazil using 2010 Census

Abstract

The article studies relative household poverty in Brazilian municipalities of different socio-economic backgrounds. The study aims at understanding the role of regional disparities on poverty. First, we focus on methodological aspects, including the discussion about omitted variable bias and an examination of sensitivity of results to changes in methods and assumptions. We also exploit the great heterogeneity in the correlation between local characteristics and income. Finally, we discuss the poverty determinants, comprising variables at household and municipal levels. We use different methodologies: Ordinary Least Squares (OLS), hierarchical models and quantile regression. The results suggest that public policies focused on the promotion of the human development and of the formal labor market are of great importance in reducing poverty.