IDEAS home Printed from https://ideas.repec.org/p/dls/wpaper/0220.html
   My bibliography  Save this paper

The Labor Market Effects of an Educational Expansion. A Theoretical Model with Applications to Brazil

Author

Listed:
  • David Jaume

    (Department of Economics, Cornell University.)

Abstract

Most countries are rapidly increasing the educational attainment of their workforce. This paper develops a novel framework to study, theoretically and empirically, the effects of an educational expansion on the occupational structure of employment and distinct aspects of the wage distribution—wage levels, wage gaps, and poverty and inequality indicators—with an application to Brazil. I proceed in three steps. First, I provide some stylized facts of the Brazilian economy between 1995 and 2014: A large educational expansion took place; the occupational structure of employment remained surprisingly fixed; workers of all educational groups—primary or less, secondary, and university—were increasingly employed in occupations of lower ranking as measured by average wages over the period; and wages of primary educated workers increased while wages of more educated workers declined, bringing forth reductions in poverty and inequality. Second, I build a model that traces these heterogeneous patterns of occupations and wages to the educational expansion. The model assigns workers with three levels of education to a continuum of occupations that vary in complexity and are combined to produce a final good. I investigate three different policy experiments: An increase in university level, an increase in secondary level, and a simultaneous increase in both. The predicted effects depend on the policy analyzed. Considering the educational expansion that took place in Brazil (simultaneous increases in university and secondary levels), the model predicts qualitatively all the observed labor market changes in the occupational structure of employment and the wage distribution. Finally, I calibrate the model with the data from 1995 and show that, through its lens, the observed educational expansion in Brazil explains 66 percent of the occupational downgrading and around 80 percent of the changes in wage levels, inequality, and poverty during the period of 1995-2014.

Suggested Citation

  • 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.
  • Handle: RePEc:dls:wpaper:0220
    as

    Download full text from publisher

    File URL: http://www.cedlas.econo.unlp.edu.ar/wp/wp-content/uploads/doc_cedlas220.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Cruces, Guillermo & Fields, Gary S. & Jaume, David & Viollaz, Mariana, 2017. "Growth, Employment, and Poverty in Latin America," OUP Catalogue, Oxford University Press, number 9780198801085.
    2. Costas Meghir & Renata Narita & Jean-Marc Robin, 2015. "Wages and Informality in Developing Countries," American Economic Review, American Economic Association, vol. 105(4), pages 1509-1546, April.
    3. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    4. Gary S. Becker, 1994. "Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition," NBER Books, National Bureau of Economic Research, Inc, number beck94-1, May.
    5. 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.
    6. Branko Milanovic & Paola Salardi, 2016. "The Evolution of Gender and Racial Occupational Segregation Across Formal and Non-Formal Labor Markets in Brazil, 1987 to 2006," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62, pages 68-89, August.
    7. Barbara Bruns & David Evans & Javier Luque, 2012. "Achieving World-Class Education in Brazil : The Next Agenda," World Bank Publications, The World Bank, number 2383.
    8. Gabriel Ulyssea, 2018. "Firms, Informality, and Development: Theory and Evidence from Brazil," American Economic Review, American Economic Association, vol. 108(8), pages 2015-2047, August.
    9. Maarten Goos & Alan Manning & Anna Salomons, 2014. "Explaining Job Polarization: Routine-Biased Technological Change and Offshoring," American Economic Review, American Economic Association, vol. 104(8), pages 2509-2526, August.
    10. Carlos Rodriguez-Castelan & Luis F. Lopez-Calva & Nora Lustig & Daniel Valderrama, 2016. "Understanding the Dynamics of Labor Income Inequality in Latin America," Working Papers 1608, Tulane University, Department of Economics.
    11. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-880, June.
    12. Christian Moser & Niklas Engbom, 2016. "Earnings Inequality and the Minimum Wage: Evidence from Brazil," 2016 Meeting Papers 72, Society for Economic Dynamics.
    13. Rafael Dix-Carneiro & Brian K. Kovak, 2015. "Trade Liberalization and the Skill Premium: A Local Labor Markets Approach," American Economic Review, American Economic Association, vol. 105(5), pages 551-557, May.
    14. Rafael Dix-Carneiro & Brian K. Kovak, 2015. "Trade Liberalization and the Skill Premium: A Local Labor Markets Approach," NBER Working Papers 20912, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fernández, Manuel & Messina, Julián, 2018. "Skill premium, labor supply, and changes in the structure of wages in Latin America," Journal of Development Economics, Elsevier, vol. 135(C), pages 555-573.

    More about this item

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dls:wpaper:0220. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ana Pacheco). General contact details of provider: http://edirc.repec.org/data/funlpar.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.