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Abstract
The objective of this work is to analyze the effects of National Program for
Strengthening of Family Agriculture (Pronaf) in rural economic growth and income
inequality in Brazil in the 2001-2009 period. For this, it is estimated (through dynamic
panel model: GMM-System) income-Pronaf and inequality- Pronaf elasticities. The work
assumes that the variable Pronaf does not directly affect poverty and it does so from the
variation of income and/or changes in income distribution. The literature review indicated
that an increase in per capita income and a decrease in the Gini coefficient lead to a
reduction of rural poverty, and a positive change in Pronaf credits leads to an increase
in per capita household income and a decrease in the income concentration. The estimates
for rural Brazilian indicate that: i) the increase in per capita income or decrease in income
inequality tend to reduce poverty; ii) the effect of Pronaf on the average per capita income
and income inequality is conditioned by the socioeconomic specifics of observation units, and iii) the expenses of Pronaf tend to indirectly reduce poverty by increasing the average income of farmers and
reducing the income concentration.