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A more level playing field? Explaining the decline in earnings inequality in Brazil, 1995-2012

Author

Listed:
  • Francisco H. G. Ferreira
  • Sergio P. Firpo
  • Julian Messina

Abstract

The Gini coefficient of labour earnings in Brazil fell by 20% between 1995 and 2012, from 0.5 to 0.4. The decline was even larger by other measures, with the 90-10 percentile ratio falling by almost 40%. Although the conventional explanation of falling returns to education did play a role, a RIF regression-based decomposition analysis suggests that substantial reductions in the gender, race and spatial wage gaps, conditional on human capital and institutional variables, explain the lion’s share of the decline in earnings inequality. Lower male, white, urban and Southeast wage premia, alongside lower formal-informal wage gaps, account for 6.3 of the ten Gini points difference between 1995 and 2012. Although rising minimum wages contributed to the decline during 2004-2012, they had no such effect during 1995-2002.

Suggested Citation

  • Francisco H. G. Ferreira & Sergio P. Firpo & Julian Messina, 2014. "A more level playing field? Explaining the decline in earnings inequality in Brazil, 1995-2012," Global Development Institute Working Paper Series iriba_wp12, GDI, The University of Manchester.
    • Handle: RePEc:bwp:bwppap:iriba_wp12
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    References listed on IDEAS

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    2. Calvo,Paula Andrea & Lopez-Calva,Luis-Felipe & Posadas,Josefina, 2015. "A decade of declining earnings inequality in the Russian Federation," Policy Research Working Paper Series 7392, The World Bank.
    3. Yang Wang, 2015. "Education Expansion and Decline in Tertiary Premium in Brazil: 1995-2013," Working Papers 1525, Tulane University, Department of Economics.
    4. Armando Barrientos & Ed Amann, 2014. "Is there a new Brazilian model of development? Main findings from the IRIBA research programme," Global Development Institute Working Paper Series iriba_wp13, GDI, The University of Manchester.
    5. Alessandra Brito & Miguel Foguel & Celia Kerstenetzky, 2017. "The contribution of minimum wage valorization policy to the decline in household income inequality in Brazil: A decomposition approach," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 40(4), pages 540-575, October.
    6. Leonardo Gasparini & Guillermo Cruces & Leopoldo Tornarolli, 2016. "Chronicle of a Deceleration Foretold: Income inequality in Latin America in the 2010s," CEDLAS, Working Papers 0198, CEDLAS, Universidad Nacional de La Plata.
    7. Verónica Alaimo & Mariano Bosch & David S. Kaplan & Carmen Pagés & Laura Ripani, 2015. "Jobs for Growth," IDB Publications (Books), Inter-American Development Bank, number 90977, February.

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