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.
Per capita income; income distribution; Pronaf; rural poverty