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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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    1. Ferreira, Francisco H. G. & Leite, Phillippe G. & Litchfield, Julie A., 2008. "The Rise And Fall Of Brazilian Inequality: 1981–2004," Macroeconomic Dynamics, Cambridge University Press, vol. 12(S2), pages 199-230, September.
    2. Carlos Henrique L. Corseuil & Rita Almeida & Pedro Carneiro, 2012. "Inspeção do Trabalho e Evolução do Emprego Formal no Brasil," Discussion Papers 1688, Instituto de Pesquisa Econômica Aplicada - IPEA.
    3. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, Elsevier.
    4. Diego Battistón & Carolina García-Domench & Leonardo Gasparini, 2014. "Could an Increase in Education Raise Income Inequality? Evidence for Latin America," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 51(1), pages 1-39, May.
    5. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    6. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
    7. Francois Bourguignon & Francisco H.G. Ferreira & Nora Lustig, 2005. "The Microeconomics of Income Distribution Dynamics in East Asia and Latin America," World Bank Publications, The World Bank, number 14844, 05-2018.
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. Yang Wang, 2015. "Education Expansion and Decline in Tertiary Premium in Brazil: 1995-2013," Working Papers 1525, Tulane University, Department of Economics.

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