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Ageing poorly? : accounting for the decline in earnings inequality in Brazil, 1995-2012

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  • Ferreira,Francisco H. G.
  • Firpo,Sergio P.
  • Messina,Julian

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.

Suggested Citation

  • Ferreira,Francisco H. G. & Firpo,Sergio P. & Messina,Julian, 2017. "Ageing poorly? : accounting for the decline in earnings inequality in Brazil, 1995-2012," Policy Research Working Paper Series 8018, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8018
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    1. Ageing Poorly? Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012
      by maximorossi in NEP-LTV blog on 2018-12-18 14:45:02

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    2. Niklas Engbom & Gustavo Gonzaga & Christian Moser & Roberta Olivieri, 2022. "Earnings inequality and dynamics in the presence of informality: The case of Brazil," Quantitative Economics, Econometric Society, vol. 13(4), pages 1405-1446, November.
    3. Luis Ayala & Javier Mart n-Rom n & Juan Vicente, 2023. "What Contributes to Rising Inequality in Large Cities?," LIS Working papers 850, LIS Cross-National Data Center in Luxembourg.
    4. Leopoldo Tornarolli & Matías Ciaschi & Luciana Galeano, 2018. "Income Distribution in Latin America. The Evolution in the Last 20 Years: A Global Approach," CEDLAS, Working Papers 0234, CEDLAS, Universidad Nacional de La Plata.
    5. Bargain, Olivier B. & Doorley, Karina & Van Kerm, Philippe, 2018. "Minimum Wages and the Gender Gap in Pay: New Evidence from the UK and Ireland," IZA Discussion Papers 11502, Institute of Labor Economics (IZA).
    6. Ponticelli, Jacopo & Bustos, Paula & Castro-Vincenzi, Juan & Monras, Joan, 2018. "Industrialization without Innovation," CEPR Discussion Papers 13379, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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