USP study warns of income loss in Brazil's rural municipalities

A study by the Center for Research in Macroeconomics of Inequality (Made) at the University of São Paulo (USP) warns that failing to provide real adjustments to social security and welfare benefits could significantly reduce aggregate income in Brazil's rural municipalities.

In the state of Ceará, the lack of real increases could lead to a reduction in aggregate income of up to 13% in interior municipalities. In these areas, pensions, Bolsa Família, and the Continuous Cash Benefit (BPC) account for 40% of aggregate income, compared to 22% in the Fortaleza metropolitan area.

In Rio Grande do Norte, the impact could be even more severe, with a projected reduction of up to 18% in the aggregate income of interior municipalities. The study notes that these regions are highly vulnerable because social transfers are vital for sustaining local commerce, including supermarkets, pharmacies, and small service providers.

The research compares scenarios of real wage growth against scenarios where benefits only track inflation. It highlights that without real gains, millions of people living outside metropolitan regions could fall into poverty or extreme poverty.