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Further Evidence on Wage and Productivity Differentials in Brazil

  • Alexandre Rands

    ()

    (Datamétrica Consultoria, Pesquisa e Telemarketing)

  • Marcelo Eduardo A. da Silva

    (Datamétrica Consultoria, Pesquisa e Telemarketing)

This paper discusses the relationship between the elasticities of wages and productivity with respect to human capital. The goal is to search if there is a distortion on the expected relationship between these two variables, given market forces and a selfish behavior by agents, as it is found in some Europeans countries. A general equilibrium, overlapping generation model that can capture the relationship between these two elasticities is presented. Two equations that emerge from this model are estimated, using data from RAIS and IBGE Pesquisa Industrial Annual for 2000. The results indicate that local labor market attenuates income inequality, transferring income from more qualified to less qualified workers, similarly to what happens in European labor markets.

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File Function: Revised version, 2003.
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Paper provided by Datamétrica Consultoria Econômica in its series Working Papers with number 34.

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Length: 22 pages
Date of creation: 2003
Date of revision: 2003
Handle: RePEc:dtm:wpaper:34
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  1. Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
  2. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  3. Alan B. Krueger & Mikael Lindahl, 1999. "Education for Growth in Sweden and the World," NBER Working Papers 7190, National Bureau of Economic Research, Inc.
  4. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  5. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  6. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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