2026 - Edition 102 | July 28

Despite educational advances, the Brazilian economic model needs to play a more relevant role in increasing the country's social mobility

Olá Leitor,

Education, among all the vectors of social mobility, is undoubtedly the main one. Increase in the average education of the citizen allows for relevant individual gains, greater employability, increased productivity and economic gains for society as a whole.

Unlike in the past, our educational system reveals that more than 80% of young people between 15 and 17 years of age currently complete elementary and junior high school, while 70% of young people between 18 and 24 years of age complete high school. These results contrast with Brazil 40 years ago, when approximately 30% of young people completed high school. In the same period, the number of young people who did not complete elementary school fell to a quarter of what it was. It is evident that younger cohorts are more educated than their peers three or four decades ago. This change was particularly marked among women, who are currently more educated than men.

In addition to being more educated, the younger cohorts remain very active in the labor market, with a participation rate of more than 70% for all young age groups, with the exception of the 15 to 17 age subgroups, which have shown a significant drop in the last 20 years.

However, despite improvement in education and the high rate of participation in the labor market, there have been no gains in productivity or acceleration of social mobility in Brazil, which is still very dependent on the education and income of parents.

To a large extent, this is because a significant part of young people, especially those with lower education, enter the informal labor market, often through informal companies. Informality affects the entire professional trajectory of these individuals, as well as determining low productivity of a significant part of workers. They are informal companies with informal workers. They are companies with low productivity with workers with low productivity. And, even among formal companies, productivity is low.

In summary, despite improvement in the education of young people and good rate of participation in the labor market, the fact is that our youth still have low schooling, poor insertion in the labor market with informal occupations, working for formal companies with low productivity. When they get older, this generation will leave the labor market early due to their precocious obsolescence in the workforce. All this directly and negatively impacts the average productivity of Brazilian workers and limits their possibilities of ascension and social mobility.

This is easily seen when we look back at our economy over the past 40 years. Our economic growth is running at around 2.1% per year, on average, corresponding to half of the world average and one third of the growth obtained between 1961 and 1987 (6.1%), despite the gross supply of working age labor having gone from 42.93 million to 146.82 million in the period, with an annual growth of 3.38%, and our schooling having advanced considerably.

We know that countries that get rich take advantage of the demographic boom, combining investments in infrastructure and human capital, making private investment more flexible, and increasing productivity. Here, we are moving in the opposite direction: little investment in human capital (especially in educational quality) and infrastructure, discouraging rules for private capital and fostering enormous legal uncertainty.

Data from the World Bank reveal that, in 1988, we occupied the 75th position in the ranking of per capita GDP. In 2023, we fell to 91st position and distanced ourselves from the rest of the countries - not only rich nations, but also those with similar per capita GDP. Korea, practically the same as Brazil in 1990, now has a per capita GDP 2.64 times higher than ours. Thailand, Malaysia and Costa Rica, which had a per capita GDP lower than Brazil's, today surpass us. Even Botswana has already surpassed us.

It is not enough that we increase the average schooling of our population, nor that we improve the quality of health, increasing the survival of individuals. It is equally necessary for our economy to grow by leaps and bounds, reducing poverty and creating opportunities for young people who have been educating themselves more.

A new development model is needed that generates more wealth, better jobs and allows individuals from the most disadvantaged strata of society to truly enjoy economic progress and achieve a rise in schooling, income and social mobility.

See you in the next "IMDS Letter"!

Paulo Tafner
CEO