Ageing Poorly? Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012

45 Pages Posted: 10 Apr 2017

See all articles by Francisco H. G. Ferreira

Francisco H. G. Ferreira

World Bank - Development Research Group (DECRG)

Sergio Firpo

Insper

Julian Messina

Inter-American Development Bank (IDB) - Research Department

Multiple version iconThere are 2 versions of this paper

Abstract

The Gini coefficient of labor earnings in Brazil fell by nearly a fifth between 1995 and 2012, from 0.50 to 0.41. The decline in earnings inequality was even larger by other measures, with the 90-10 percentile ratio falling by almost 40 percent. Although the conventional explanation of a falling education premium did play a role, an RIF regression-based decomposition analysis suggests that the decline in returns to potential experience was the main factor behind lower wage disparities during the period. Substantial reductions in the gender, race, informality and urban-rural wage gaps, conditional on human capital and institutional variables, also contributed to the decline. Although rising minimum wages were equalizing during 2003-2012, they had the opposite effects during 1995-2003, because of declining compliance. Over the entire period, the direct effect of minimum wages on inequality was muted.

Keywords: earnings inequality, Brazil, RIF regressions

JEL Classification: D31, J31

Suggested Citation

Ferreira, Francisco H. G. and Firpo, Sergio and Messina, Julian, Ageing Poorly? Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012. IZA Discussion Paper No. 10656. Available at SSRN: https://ssrn.com/abstract=2949072

Francisco H. G. Ferreira (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-4382 (Phone)

Sergio Firpo

Insper ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil

HOME PAGE: http://https://sites.google.com/site/sergiopfirpo/

Julian Messina

Inter-American Development Bank (IDB) - Research Department ( email )

1300 New York Ave., NW
Washington, DC 20577
United States

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