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Skinning the Cat: Education Distribution, Changes in the School Premium and Earnings Inequality

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  • Sergio G. Ferreira

    (IBMEC Business School - Rio de Janeiro)

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    Abstract

    This paper applies the procedure in JUHN ET ALL (1993) to decompose changes in income inequality over time in terms of education-related causal factors: school premiums, educational distribution and residual changes. The main conclusion is that reductions in the school premiums have systematically had a negative impact on income inequality during the last twenty years. At the same time, education has become more unequally distributed for individuals below the median labor income level and more equally distributed for those above it. The combination of the two forces has reduced income dispersion for the top half of earners, and slightly increased it among the bottom half. This difference in trends of educational distribution lies behind an apparently stable profile of income inequality (considering the whole earnings distribution).

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    File URL: http://professores.ibmecrj.br/erg/dp/papers/dp200503.pdf
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    Bibliographic Info

    Paper provided by Economics Research Group, IBMEC Business School - Rio de Janeiro in its series IBMEC RJ Economics Discussion Papers with number 2005-03.

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    Date of creation: 30 Nov 2005
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    Handle: RePEc:ibr:dpaper:2005-03

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    1. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
    2. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
    3. Almeida dos Reis, Jose Guilherme & Paes de Barros, Ricardo, 1991. "Wage inequality and the distribution of education : A study of the evolution of regional differences in inequality in metropolitan Brazil," Journal of Development Economics, Elsevier, vol. 36(1), pages 117-143, July.
    4. Ram, Rati, 1990. "Educational Expansion and Schooling Inequality: International Evidence and Some Implications," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 266-74, May.
    5. Jovanovic, Boyan & Rob, Rafael, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 56(4), pages 569-82, October.
    6. Acemoglu, D., 1996. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," Working papers 96-15, Massachusetts Institute of Technology (MIT), Department of Economics.
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