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Firms and the Decline in Earnings Inequality in Brazil

Author

Listed:
  • Jorge Alvarez
  • Felipe Benguria
  • Niklas Engbom
  • Christian Moser

Abstract

We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed-effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity-pay premium. Our results shed light on potential drivers of earnings inequality dynamics.

Suggested Citation

  • Jorge Alvarez & Felipe Benguria & Niklas Engbom & Christian Moser, 2018. "Firms and the Decline in Earnings Inequality in Brazil," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 149-189, January.
  • Handle: RePEc:aea:aejmac:v:10:y:2018:i:1:p:149-89
    Note: DOI: 10.1257/mac.20150355
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    Cited by:

    1. Schaefer, Daniel & Singleton, Carl, 2017. "Recent changes in British wage inequality: Evidence from firms and occupations," MPRA Paper 76744, University Library of Munich, Germany.
    2. Nick Bloom & Fatih Guvenen & David J. Price & Jae Song, 2015. "Firming Up Inequality," CEP Discussion Papers dp1354, Centre for Economic Performance, LSE.
    3. Christian Moser & Niklas Engbom, 2016. "Earnings Inequality and the Minimum Wage: Evidence from Brazil," 2016 Meeting Papers 72, Society for Economic Dynamics.
    4. Ferreira,Francisco H. G. & Firpo,Sergio P. & Messina,Julian, 2017. "Ageing poorly? : accounting for the decline in earnings inequality in Brazil, 1995-2012," Policy Research Working Paper Series 8018, The World Bank.
    5. Felipe Benguria & Felipe Saffie & Sergio Urzúa, 2018. "The Transmission of Commodity Price Super-Cycles," NBER Working Papers 24560, National Bureau of Economic Research, Inc.
    6. David Jaume, 2018. "The Labor Market Effects of an Educational Expansion. A Theoretical Model with Applications to Brazil," CEDLAS, Working Papers 0220, CEDLAS, Universidad Nacional de La Plata.
    7. repec:aea:aecrev:v:107:y:2017:i:5:p:379-83 is not listed on IDEAS
    8. David Jose Jaume, 2017. "The Labor Market Effects of an Educational Expansion. A Theoretical Model with Applications to Brazil," 2017 Papers pja468, Job Market Papers.
    9. repec:wbk:wbpubs:28682 is not listed on IDEAS
    10. Andrew Garin & Filipe Silverio, 2017. "How Does Firm Performance Affect Wages? Evidence from Idiosyncratic Export Shocks," 2017 Papers pga940, Job Market Papers.

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