Informal labor and poverty in the metropolitan region of Rio de Janeiro, Brazil

Abstract

Poverty in Brazil persists as a significant challenge for society, addressing not only fundamental moral concerns but also the need to promote conditions conducive to economic and social development. The complexity of the problem, characterized by multiple factors beyond income, includes historical inequalities, unequal economic structures, and limited access to resources and public services. Despite advancements in recent decades, the increase in poverty between 2014 and 2016, driven by growing income inequality, underscores the fragility of these advances. The rise in poverty rates in the Metropolitan Region of the state of Rio de Janeiro, where affluent areas coexist with deprived communities, becomes a cause for concern, exacerbated by factors such as lack of decent employment, educational precarity and socio-economic impacts of the pandemic. Confronting these issues, a detailed analysis using data from the Continuous National Household Sample Survey (Continuous PNAD) of 2012, 2016 and 2020 highlights the formality of employment as a crucial factor in poverty reduction in the region. The transition from informality to formality is associated with significant gains in poverty reduction, surpassing even the impact of the educational level of the head of the household. Results from Bayesian logistic regression show that formality decreases the likelihood of individuals and their families having per capita household income below the poverty line. This research emphasizes the need for comprehensive public policies in the state of Rio de Janeiro, aiming to promote economic opportunities, improve the quality of education and invest in infrastructure, underscoring the importance of enhancing employment ties as an effective strategy in the fight against poverty.