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Human capital and earnings inequality in Brazil, 1988-98 : quantile regression evidence

  • G. Reza Arabsheibani
  • Francisco Galrao Carneiro
  • Andrew Henley

The authors undertake an empirical examination of rates of return to human capital for men in Brazil, through the period of macroeconomic stabilization and trade liberalization, using data from the 1988, 1992, and 1998 Brazilian household surveys (Pesquisa Nacional por Amostra de Domic?os, PNAD). The authors estimate simultaneous quantile equations to gain an insight on the impact of human capital on wages across the hourly earnings distribution. They conclude that there is evidence of growing inequality in rates of return to education in Brazil. But the authors find evidence that education is no longer used as a screening device in the labor market, but rather rewarded for its innate association with higher productivity. Although increases in rates of return to education have been more pronounced at the top of the earnings distribution, this has not led to increased inequality. This is because the levels of education and other labor market-rewarded endowments have increased and offset the rate of return effect.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3147.

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Date of creation: 01 Oct 2003
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Handle: RePEc:wbk:wbrwps:3147
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  1. Levison, D. & Lam, D., 1990. "Declining Inequality In Schooling In Brazil And Its Effects On Inequality In Earning," Papers 618, Yale - Economic Growth Center.
  2. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  3. Carneiro, Francisco G., 1998. "Productivity effects in brazilian wage determination," World Development, Elsevier, vol. 26(1), pages 139-153, January.
  4. Lee, Kiong-Hock, 1980. "Screening, ability, and the productivity of education in Malaysia," Economics Letters, Elsevier, vol. 5(2), pages 189-193.
  5. Francisco Carneiro & Andrew Henley, 1998. "Wage determination in Brazil: The growth of union bargaining power and informal employment," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 117-138.
  6. Psacharopoulos, George, 1979. "On the weak versus the strong version of the screening hypothesis," Economics Letters, Elsevier, vol. 4(2), pages 181-185.
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