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Why Is Poverty So High Among Afro-Brazilians? A Decomposition Analysis of the Racial Poverty Gap

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Author Info
Carlos Gradín () (Universidade de Vigo and IZA)

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Abstract

This study aimed to identify the major factors underlying the large discrepancy in poverty levels between two Brazilian racial groups: whites and Afro-Brazilians. We performed an Oaxaca-Blinder-type decomposition for nonlinear regressions in order to quantify the extent to which differences in observed geographic, sociodemographic, and labor characteristics (characteristics effect) account for this difference. The remaining unexplained part (coefficients effect) provides evidence on how these characteristics differentially impact on the risk of poverty in each group. A detailed decomposition of both effects allows the individual contribution of each characteristic to be determined. Our results show that the characteristics effect explains a large part of the discrepancy in poverty levels, with education and labor variables of household members explaining at least one half of the effect, and geographic and demographic variables accounting for the remainder. However, the unexplained part that remains significant has increased in importance in recent last years, and probably results from unequal access to high-quality education and the persistence of discrimination against colored workers in the labor market.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2809.

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Length: 36 pages
Date of creation: May 2007
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Handle: RePEc:iza:izadps:dp2809

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Related research
Keywords: poverty; gap; race; skin color; decomposition; Oaxaca-Blinder; Brazil; PNAD; labor market; participation; education; household characteristics;

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination
J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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  1. Sumon Kumar Bhaumik & Ira N. Gang & Myeong-Su Yun, 2006. "A Note on Decomposing Differences in Poverty Incidence Using Regression Estimates: Algorithm and Example," Departmental Working Papers 200633, Rutgers University, Department of Economics. [Downloadable!]
    Other versions:
  2. Jean-Louis Arcand & Béatrice D'hombres, 2004. "Racial discrimination in the Brazilian labour market: wage, employment and segregation effects," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(8), pages 1053-1066. [Downloadable!]
    Other versions:
  3. Myeong-Su Yun, 2005. "Normalized Equation and Decomposition Analysis: Computation and Inference," IZA Discussion Papers 1822, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Vani Borooah & Sriya Iyer, 2005. "Vidya , Veda , and Varna : The influence of religion and caste on education in rural India," The Journal of Development Studies, Taylor and Francis Journals, vol. 41(8), pages 1369-1404, November. [Downloadable!] (restricted)
    Other versions:
  5. Ham, John C & Svejnar, Jan & Terrell, Katherine, 1998. "Unemployment and the Social Safety Net during Transitions to a Market Economy: Evidence from the Czech and Slovak Republics," American Economic Review, American Economic Association, vol. 88(5), pages 1117-42, December. [Downloadable!] (restricted)
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  6. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, 04. [Downloadable!] (restricted)
    Other versions:
  7. Claudio Quintano & Antonella D'Agostino, 2006. "Studying Inequality In Income Distribution Of Single-Person Households In Four Developed Countries," Review of Income and Wealth, Blackwell Publishing, vol. 52(4), pages 525-546, December. [Downloadable!] (restricted)
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  9. Francisco H. G. Ferreira & Peter Lanjouw & Marcelo Côrtes Neri, 2003. "A Robust Poverty Profile for Brazil Using Multiple Data Sources," Revista Brasileira de Economia, Graduate School of Economics, Getulio Vargas Foundation (Brazil), vol. 57(1), April. [Downloadable!]
    Other versions:
  10. Vani K. Borooah, 2005. "Caste, Inequality, and Poverty in India," Review of Development Economics, Blackwell Publishing, vol. 9(3), pages 399-414, 08. [Downloadable!] (restricted)
  11. Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, Blackwell Publishing, vol. 34(2), pages 115-42, June.
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  13. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October. [Downloadable!] (restricted)
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  14. Gang, Ira N. & Rivera-Batiz, Francisco L. & Yun, Myeong-Su, 2002. "Economic Strain, Ethnic Concentration and Attitudes Towards Foreigners in the European Union," IZA Discussion Papers 578, Institute for the Study of Labor (IZA). [Downloadable!]
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  15. Yun, Myeong-Su, 2004. "Decomposing differences in the first moment," Economics Letters, Elsevier, vol. 82(2), pages 275-280, February. [Downloadable!] (restricted)
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  16. Suits, Daniel B, 1984. "Dummy Variables: Mechanics v. Interpretation," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 177-80, February. [Downloadable!] (restricted)
  17. Fairlie, Robert W, 1999. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 80-108, January. [Downloadable!] (restricted)
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