Wage Inequality Changes in Brazil: Market Forces, Macroeconomic Instability and Labor Market Institutions (1981-1997)
In this paper, I examine the sources of wage inequality changes among prime age male workers in Brazil during the 1980's and 1990's. Inequality increased in the 1980's and decreased in the 1990's. I begin by decomposing these changes into three effects. First, the effect due to changes in the skill distribution of the workers; second, the effect due to changes in skill prices and premiums; and third, the residual effect which is interpreted as due to changes in the distribution of unobservable skills and their prices. I find that most of the sources of these changes are due to changes in (i) the unabservable skill prices and (ii) the observable skill prices associated to industry, occupation and occupation status. After showing that these changes in skill prices are not consistent with the changes in the supply of and demand for labor during these periods, I examine the possibility that the minimum wage policy and the macreconomic instability of the period can explain these changes. I find that inflation is strongly associated with inequality mainly due to its unanticipated component. This may be interpreted as indirect evidence that the indexation system adopted in Brazil during the high-inflation years may be a mechanism through which inflation affected wage inequality.
|Date of creation:||May 2002|
|Contact details of provider:|| Web page: http://www.vanderbilt.edu/econ/wparchive/index.html|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996.
"Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach,"
Econometric Society, vol. 64(5), pages 1001-1044, September.
- Nidardo, J. & Fortin, N. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Papers 93-94-15, California Irvine - School of Social Sciences.
- Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Cahiers de recherche 9406, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Dinardo, J. & Fortin, N.M. & Lemieux, T., 1994. "Labor Market Institutions and the Distribution of Wages, 1973-1992: a Semiparametric Approach," Cahiers de recherche 9406, Universite de Montreal, Departement de sciences economiques.
- John DiNardo & Nicole M. Fortin & Thomas Lemieux, 1995. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," NBER Working Papers 5093, National Bureau of Economic Research, Inc.
- Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
- Lawrence F. Katz & Kevin M. Murphy, 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," NBER Working Papers 3927, National Bureau of Economic Research, Inc.
- Katz, L.F. & Murphy, K.M., 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Harvard Institute of Economic Research Working Papers 1580, Harvard - Institute of Economic Research.
- Francisco H.G. Ferreira & Julie Litchfield, 1996. "Growing Apart: Inequality and Poverty Trends in Brazil in the 1980s," STICERD - Distributional Analysis Research Programme Papers 23, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Wood, Adrian, 1998. "Globalisation and the Rise in Labour Market Inequalities," Economic Journal, Royal Economic Society, vol. 108(450), pages 1463-1482, September.
- Card, David, 1986. "An Empirical Model of Wage Indexation Provisions in Union Contracts," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 144-175, June.
- David Card, 1984. "An Empirical Model of Wage Indexation Provisions in Union Contracts," NBER Working Papers 1388, National Bureau of Economic Research, Inc.
- Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, vol. 59(1), pages 103-123, June.
- Ehrenberg, Ronald G & Danziger, Leif & San, Gee, 1983. "Cost-of-Living Adjustment Clauses in Union Contracts: A Summary of Results," Journal of Labor Economics, University of Chicago Press, vol. 1(3), pages 215-245, July.
- Ferreira, Francisco H. G. & Paes de Barrios, Ricardo, 1999. "The slippery slope : explaining the increase in extreme poverty in urban Brazil, 1976-96," Policy Research Working Paper Series 2210, The World Bank.
- Rebecca M. Blank & David Card, 1993. "Poverty, Income Distribution, and Growth: Are They Still Connected," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2), pages 285-340.
- Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1995. "A Comparison of Changes in the Structure of Wages in Four OECD Countries," NBER Chapters,in: Differences and Changes in Wage Structures, pages 25-66 National Bureau of Economic Research, Inc.
- David Blanchflower & L Katz & G Loveman, 1993. "A Comparison of Changes in the Structure of Wages in Four OECD Countries," CEP Discussion Papers dp0144, Centre for Economic Performance, LSE.
- Hamermesh, Daniel S, 1986. "Inflation and Labour Market Adjustment," Economica, London School of Economics and Political Science, vol. 53(29), pages 63-73, February.
- Daniel S. Hamermesh, 1983. "Inflation and Labor-Market Adjustment," NBER Working Papers 1153, National Bureau of Economic Research, Inc.
- Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
- Francisco de Hollanda Guimarães Ferreira & Ricardo Paes de Barros, 1999. "The slippery slope: explaining the increase in extreme poverty in urban Brazil, 1976-1996," Textos para discussão 404, Department of Economics PUC-Rio (Brazil).
- Cragg, Michael Ian & Epelbaum, Mario, 1996. "Why has wage dispersion grown in Mexico? Is it the incidence of reforms or the growing demand for skills?," Journal of Development Economics, Elsevier, vol. 51(1), pages 99-116, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:van:wpaper:0215. 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: (John P. Conley)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.