capita measure of the total economic shortfall relative to the population. P1 distinguishes the poor from the not-so-poor and corresponds to the average distance to the poverty line of the poor. One problem with the poverty gap measure is that it will increase by transfers of money from poor to less poor (who become non-poor), and from poor to non-poor. Furthermore, transfers among the poor have no effect on the poverty gap measure.

The P2 measure of poverty is sensitive to the distribution among the poor as more weight is given to the poorest below the poverty line. P2 corresponds to the squared average distance of income of the poor to the poverty line. Hence, moving from P0 towards P2, more weight is given to the poorest in the population.

This paper sets its poverty bar very low. To define “extreme poverty” it uses the indigence, or “food only” poverty line—those with sufficient income to buy a basic food basket are above the line. The poverty line is based on the monetary value of food items only. This measure is based on the cost of a “minimum food-basket” equal to the FAO minimum caloric intake of 2,288 daily per household member. Households are classified as extremely poor if their total income is less than the cost of a basic food basket. In 2001, the poverty line was of R$80.92. Finally, references are also made to the minimum wage and it was R$151 in 2000.

As with most poverty studies in Brazil, no adjustment is made for the fact that young children do not need as many calories as adults do. Hence, the poverty rates presented in this paper may slightly overstate poverty in Pará.

The analysis of poverty correlates is based on two multivariate analyses, using the probit regression techniques, simultaneously for: (1) urban Brazil and urban Pará, and (2) urban and rural areas in Pará.

# **DATA**

The analysis in this paper is based on available data: Brazilian household surveys _PNADs_ (1981-2001), Censuses from 1991 and 2000, Indices of quality of life (IQV) from 1990 and 2000, human development Indicators (HDI) from 1991 and 2000, _Contas Regionais do Brasil_ , _Pesquisa Nacional de Saneamento Básico_ , and other data available online, such as educational data, including _Bolsa Escola_ data, from MEC/INEP, government spending data from STN/Ministry of Finance and various data from the state government of Pará.

The PNADs for the North region, including Pará, contain information only on urban areas and has no information on rural areas. Therefore, to get a more adequate picture of poverty in Pará the micro data from the Census 2000 has also be applied to perform the analysis in this paper. The urban-rural distinction applied in Census 2000 data are not directly be comparable to earlier Census. For example, in the 1991 Census, a rural area was defined as an area with less than 5000 people, while in 2000 it was area with less than 10,000 inhabitants. All the income data applied in the analysis are spatially deflated by the deflators developed in Ferreira, Lanjouw, and Neri 1998 and timely deflated by the indicator for the month of the survey (the PNAD is undertaken in the month of September and the Census in the month of July).

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