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Education, earnings, and inequality in Brazil, 1982-98 - implications for education policy

  • Blom, Andreas
  • Holm-Nielsen, Lauritz
  • Verner, Dorte

The educational attainment of Brazil's labor force, has gradually increased over the past two decades. At the same time, the government has pursued a series of economic structural adjustment policies. The authors investigate how these simultaneous advances have altered the relationship between labor market earnings, and education. They find that the returns to education in the labor market, fundamentally changed between 1982, and 1998. While the returns to tertiary education increased sharply, the returns to primary education dropped by 26 percent, and those to lower secondary, by 35 percent. Moreover, the authors argue, the marginal reduction in wage inequality that occurred in this period was linked primarily to a reduction in the returns to schooling, and only secondarily, to a more equitable distribution of schooling. The findings suggest that the supply of highly skilled labor is inadequate to meet demand. That suggests a need for policy action aimed at increasing access to, and completion of tertiary education. Increasing the supply of highly skilled labor, would improve prospects for both economic growth, and reduce wage inequality.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2686.

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Date of creation: 31 Oct 2001
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Handle: RePEc:wbk:wbrwps:2686
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  1. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  2. Behrman, Jere R & Birdsall, Nancy, 1985. "The Quality of Schooling: Reply," American Economic Review, American Economic Association, vol. 75(5), pages 1202-05, December.
  3. Kevin M. Murphy & W. Craig Riddell & Paul M. Romer, 1998. "Wages, Skills, and Technology in the United States and Canada," NBER Working Papers 6638, National Bureau of Economic Research, Inc.
  4. Dan T. Rosenbaum, 2000. "Ability, Educational Ranks, and Labor Market Trends: The Effects of Shifts in the Skill Composition of Educational Groups," JCPR Working Papers 146, Northwestern University/University of Chicago Joint Center for Poverty Research.
  5. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
  6. Francis Green & Andy Dickerson & Jorge Saba Arbache, 2000. "A Picture of Wage Inequality and the Allocation of Labour Through a Period of Trade Liberalisation: The Case of Brazil," Studies in Economics 0013, School of Economics, University of Kent.
  7. Marcelo Neri & José Márcio Camargo, 1999. "Distributive effects of Brazilian structural reforms," Textos para discussão 406, Department of Economics PUC-Rio (Brazil).
  8. Fiess, Norbert M. & Verner, Dorte, 2004. "The dynamics of poverty and its determinants - the case of the Northeast of Brazil and its states," Policy Research Working Paper Series 3259, The World Bank.
  9. Robbins, Donald & Gindling, T H, 1999. "Trade Liberalization and the Relative Wages for More-Skilled Workers in Costa Rica," Review of Development Economics, Wiley Blackwell, vol. 3(2), pages 140-54, June.
  10. 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 410-42, June.
  11. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  12. Adrian Wood, 2002. "Globalization and wage inequalities: A synthesis of three theories," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(1), pages 54-82, March.
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