Abstract

Using an input-output framework, this article studies the consequences of income
redistribution from rich people either to poor people or to the government upon the sectoral
structure of the Brazilian economy in the 70’s. Besides the traditional use of elements
of sectoral analysis, the main concept used to achieve this goal is that of “subeconomies”,
focusing on industries (and associated patterns of employment and value added) which produce
the components of particular expenditure bundles. Thus, a subeconomy is composed by
the economic activity derived from determined expenditure groups, such as poor consumer
households, government, etc. Two main results emerge from the empirical application of these
concepts. First, agriculture is the most important sector in the generation of employment
in response to transfers of income from rich to poor households. Second, the urbanization which accompanied growth during the 70’s favours a redistributive strategy in which the
role of government becomes outstanding in terms of generation of both value added and
employment.

JEL Classification: I32; J30; D31.