Formal But Less Equal. Gender Wage Gaps in Formal and Informal Jobs in Brazil

37 Pages Posted: 15 Dec 2016

See all articles by Ben Yahmed Sarra

Ben Yahmed Sarra

ZEW – Leibniz Centre for European Economic Research

Date Written: December 15, 2016

Abstract

In developing countries, a large share of employees work informally and are not covered by employment protection legislation. I study here how gender wage inequality differs across formal and informal jobs in Brazil. The raw gender wage gap is higher in informal jobs (13%) compared to formal jobs (5%), but I show that this difference is an artifact of different male and female selection processes. First, women have better observable characteristics than men and the female advantage is stronger among formal employees. Second, men and women entering formal and informal jobs have different unobservable characteristics. Controlling for endogenous selection into formal vs. informal jobs, I find that the gender gap in wage offers is high and increases with education in formal jobs. In informal jobs, however, estimated wage offers are the same for men and women. I discuss the potential implications of these findings regarding the effect of labour market regulation on gender wage gaps.

Keywords: gender wage gaps, informality, selection into work statuses, Brazil

JEL Classification: J31, O17

Suggested Citation

Sarra, Ben Yahmed, Formal But Less Equal. Gender Wage Gaps in Formal and Informal Jobs in Brazil (December 15, 2016). ZEW - Centre for European Economic Research Discussion Paper No. 16-085, Available at SSRN: https://ssrn.com/abstract=2885827 or http://dx.doi.org/10.2139/ssrn.2885827

Ben Yahmed Sarra (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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