Firms and the Decline in Earnings Inequality in Brazil

Firms and the Decline in Earnings Inequality in Brazil

Author: Jorge Alvarez

Publisher: International Monetary Fund

Published: 2017-12-14

Total Pages: 59

ISBN-13: 1484333039

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We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity pay premium. Our results shed light on potential drivers of earnings inequality dynamics.


Book Synopsis Firms and the Decline in Earnings Inequality in Brazil by : Jorge Alvarez

Download or read book Firms and the Decline in Earnings Inequality in Brazil written by Jorge Alvarez and published by International Monetary Fund. This book was released on 2017-12-14 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity pay premium. Our results shed light on potential drivers of earnings inequality dynamics.

Firms and the Decline in Earnings Inequality in Brazil

Firms and the Decline in Earnings Inequality in Brazil

Author: Jorge Alvarez

Publisher:

Published: 2019

Total Pages: 60

ISBN-13:

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We document a large decrease in earnings inequality in Brazil between 1996 and 2012.Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed effects models to understand the sources of this decrease. Firm effects account for40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease isprimarily due to a compression of returns to these characteristics, particularly a declining firm productivity pay premium. Our results shed light on potential drivers of earnings inequality dynamics.


Book Synopsis Firms and the Decline in Earnings Inequality in Brazil by : Jorge Alvarez

Download or read book Firms and the Decline in Earnings Inequality in Brazil written by Jorge Alvarez and published by . This book was released on 2019 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document a large decrease in earnings inequality in Brazil between 1996 and 2012.Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed effects models to understand the sources of this decrease. Firm effects account for40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease isprimarily due to a compression of returns to these characteristics, particularly a declining firm productivity pay premium. Our results shed light on potential drivers of earnings inequality dynamics.

Earnings Inequality and the Minimum Wage

Earnings Inequality and the Minimum Wage

Author: Niklas Engbom

Publisher:

Published: 2021

Total Pages: 0

ISBN-13:

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We show that a rise in the minimum wage accounts for a large decline in earnings inequality in Brazil since 1994. To this end, we combine rich administrative and survey data with an equilibrium model of the Brazilian labor market. Our results imply that the minimum wage has far-reaching spillover effects on wages higher up in the distribution, accounting for one-third of the 25.9 log point fall in the variance of log earnings in Brazil since 1994. At the same time, the minimum wage's effects on employment and output are muted by reallocation of workers toward more productive firms.


Book Synopsis Earnings Inequality and the Minimum Wage by : Niklas Engbom

Download or read book Earnings Inequality and the Minimum Wage written by Niklas Engbom and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that a rise in the minimum wage accounts for a large decline in earnings inequality in Brazil since 1994. To this end, we combine rich administrative and survey data with an equilibrium model of the Brazilian labor market. Our results imply that the minimum wage has far-reaching spillover effects on wages higher up in the distribution, accounting for one-third of the 25.9 log point fall in the variance of log earnings in Brazil since 1994. At the same time, the minimum wage's effects on employment and output are muted by reallocation of workers toward more productive firms.

Inequality in Brazil: A Regional Perspective

Inequality in Brazil: A Regional Perspective

Author: Carlos Góes

Publisher: International Monetary Fund

Published: 2017-10-31

Total Pages: 34

ISBN-13: 1484324773

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In this study, we document the decline in income inequality and a convergence in consumption patterns in Brazilian states in a new database constructed from micro data from the national households’ survey. We adjust the state-Gini coefficients for spatial price differences using information on households’ rental prices available in the survey. In a panel regression framework, we find that labor income growth, formalization, and schooling contributed to the decline in inequality during 2004-14, but redistributive policies, such as Bolsa Família, have also played a positive role. Going forward, it will be important to phase out untargeted subsidies, such as public spending on tertiary education, and contain growth of public sector wages, to improve budgetary efficiency and protect gains in equality.


Book Synopsis Inequality in Brazil: A Regional Perspective by : Carlos Góes

Download or read book Inequality in Brazil: A Regional Perspective written by Carlos Góes and published by International Monetary Fund. This book was released on 2017-10-31 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we document the decline in income inequality and a convergence in consumption patterns in Brazilian states in a new database constructed from micro data from the national households’ survey. We adjust the state-Gini coefficients for spatial price differences using information on households’ rental prices available in the survey. In a panel regression framework, we find that labor income growth, formalization, and schooling contributed to the decline in inequality during 2004-14, but redistributive policies, such as Bolsa Família, have also played a positive role. Going forward, it will be important to phase out untargeted subsidies, such as public spending on tertiary education, and contain growth of public sector wages, to improve budgetary efficiency and protect gains in equality.

Inequality Between and Within Firms

Inequality Between and Within Firms

Author: Felipe Benguria

Publisher:

Published: 2015

Total Pages: 56

ISBN-13:

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Using a linked employer-employee census for Brazil, this paper studies the relative importance of inequality between and within firms in explaining both levels and changes over time in overall earnings inequality. During the 1999-2013 period, the sharp decline in overall inequality in Brazil has been driven mostly by a drop in between-firm inequality. Within-firm inequality has only fallen slightly, increasing its share in overall inequality to about 44 percent by the end of this period. Estimating an earnings model that decomposes wages into worker and firm fixed effects, I find that between-firm inequality in the cross-section is explained mostly (57%) by variation across firms in the worker fixed effects. The change in between-firm inequality over this period is explained primarily by variation in the worker fixed effects, but the variation in firm fixed effects is almost as important.


Book Synopsis Inequality Between and Within Firms by : Felipe Benguria

Download or read book Inequality Between and Within Firms written by Felipe Benguria and published by . This book was released on 2015 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a linked employer-employee census for Brazil, this paper studies the relative importance of inequality between and within firms in explaining both levels and changes over time in overall earnings inequality. During the 1999-2013 period, the sharp decline in overall inequality in Brazil has been driven mostly by a drop in between-firm inequality. Within-firm inequality has only fallen slightly, increasing its share in overall inequality to about 44 percent by the end of this period. Estimating an earnings model that decomposes wages into worker and firm fixed effects, I find that between-firm inequality in the cross-section is explained mostly (57%) by variation across firms in the worker fixed effects. The change in between-firm inequality over this period is explained primarily by variation in the worker fixed effects, but the variation in firm fixed effects is almost as important.

Firms and the Decline in Earnings Inequality in Brazil

Firms and the Decline in Earnings Inequality in Brazil

Author: Jorge Alvarez

Publisher: International Monetary Fund

Published: 2017-12-14

Total Pages: 59

ISBN-13: 1484333470

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We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity pay premium. Our results shed light on potential drivers of earnings inequality dynamics.


Book Synopsis Firms and the Decline in Earnings Inequality in Brazil by : Jorge Alvarez

Download or read book Firms and the Decline in Earnings Inequality in Brazil written by Jorge Alvarez and published by International Monetary Fund. This book was released on 2017-12-14 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer-employee data, we fit high-dimensional worker and firm fixed effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity pay premium. Our results shed light on potential drivers of earnings inequality dynamics.

The Short-Term Impact of COVID-19 on Labor Markets, Poverty and Inequality in Brazil

The Short-Term Impact of COVID-19 on Labor Markets, Poverty and Inequality in Brazil

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2021-03-05

Total Pages: 36

ISBN-13: 1513571648

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We document the short-term impact of the COVID-19 pandemic on the Brazilian labor market focusing on employment, wages and hours worked using the nationally representative household surveys PNAD-Continua and PNAD COVID. Sectors most susceptible to the shock because they are more contact-intensive and less teleworkable, such as construction, domestic services and hospitality, suffered large job losses and reductions in hours. Given low income workers experienced the largest decline in earnings, extreme poverty and the Gini coefficient based on labor income increased by around 9.2 and 5 percentage points, respectively, due to the immediate shock. The government’s broad based, temporary Emergency Aid transfer program more than offset the labor income losses for the bottom four deciles, however, such that poverty relative to the pre-COVID baseline fell. At a cost of around 4 percent of GDP in 2020 such support is not fiscally sustainable beyond the short-term and ended in late 2020. The challenge will be to avoid a sharp increase in poverty and inequality if the labor market does not pick up sufficiently fast in 2021.


Book Synopsis The Short-Term Impact of COVID-19 on Labor Markets, Poverty and Inequality in Brazil by : International Monetary Fund

Download or read book The Short-Term Impact of COVID-19 on Labor Markets, Poverty and Inequality in Brazil written by International Monetary Fund and published by International Monetary Fund. This book was released on 2021-03-05 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document the short-term impact of the COVID-19 pandemic on the Brazilian labor market focusing on employment, wages and hours worked using the nationally representative household surveys PNAD-Continua and PNAD COVID. Sectors most susceptible to the shock because they are more contact-intensive and less teleworkable, such as construction, domestic services and hospitality, suffered large job losses and reductions in hours. Given low income workers experienced the largest decline in earnings, extreme poverty and the Gini coefficient based on labor income increased by around 9.2 and 5 percentage points, respectively, due to the immediate shock. The government’s broad based, temporary Emergency Aid transfer program more than offset the labor income losses for the bottom four deciles, however, such that poverty relative to the pre-COVID baseline fell. At a cost of around 4 percent of GDP in 2020 such support is not fiscally sustainable beyond the short-term and ended in late 2020. The challenge will be to avoid a sharp increase in poverty and inequality if the labor market does not pick up sufficiently fast in 2021.

Inequality in the Developing World

Inequality in the Developing World

Author: Carlos Gradín

Publisher: Oxford University Press

Published: 2021

Total Pages: 373

ISBN-13: 0198863969

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Inequality has emerged as a key development challenge. It holds implications for economic growth and redistribution and translates into power asymmetries that can endanger human rights, create conflict, and embed social exclusion and chronic poverty. For these reasons, it underpins intense public and academic debates and has become a dominant policy concern within many countries and in all multilateral agencies. It is at the core of the 17 goals of the UN 2030 Agenda for Sustainable Development. This book contributes to this important discussion by presenting assessments of the measurement and analysis of global inequality by leading inequality scholars, aligning these to comprehensive reviews of inequality trends in five of the world's largest developing countries - Brazil, China, India, Mexico, and South Africa.


Book Synopsis Inequality in the Developing World by : Carlos Gradín

Download or read book Inequality in the Developing World written by Carlos Gradín and published by Oxford University Press. This book was released on 2021 with total page 373 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inequality has emerged as a key development challenge. It holds implications for economic growth and redistribution and translates into power asymmetries that can endanger human rights, create conflict, and embed social exclusion and chronic poverty. For these reasons, it underpins intense public and academic debates and has become a dominant policy concern within many countries and in all multilateral agencies. It is at the core of the 17 goals of the UN 2030 Agenda for Sustainable Development. This book contributes to this important discussion by presenting assessments of the measurement and analysis of global inequality by leading inequality scholars, aligning these to comprehensive reviews of inequality trends in five of the world's largest developing countries - Brazil, China, India, Mexico, and South Africa.

Earnings Inequality and Dynamics in the Presence of Informality

Earnings Inequality and Dynamics in the Presence of Informality

Author: Niklas Engbom

Publisher:

Published: 2021

Total Pages: 55

ISBN-13:

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Using rich administrative and household survey data, we document a series of new facts on earnings inequality and dynamics in a developing country with a large informal sector: Brazil. Since the mid-1990s, both inequality and volatility of earnings have declined significantly in Brazil's formal sector. Higher-order moments of the distribution of earnings innovations show cyclical movements in Brazil that are similar to those in developed countries like the US. Earnings mobility is comparatively high, especially at the bottom of the distribution. Compared with those in the formal sector, earnings in the informal sector are more volatile. Workers who switch between sectors experience earnings innovations that have a positive mean and are positively skewed when moving to the formal sector but have a negative mean and are negatively skewed when moving to the informal sector. Since the early 2000s, a secular shift of employment toward the less volatile formal sector has contributed to a decline in the economy-wide volatility of earnings.


Book Synopsis Earnings Inequality and Dynamics in the Presence of Informality by : Niklas Engbom

Download or read book Earnings Inequality and Dynamics in the Presence of Informality written by Niklas Engbom and published by . This book was released on 2021 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using rich administrative and household survey data, we document a series of new facts on earnings inequality and dynamics in a developing country with a large informal sector: Brazil. Since the mid-1990s, both inequality and volatility of earnings have declined significantly in Brazil's formal sector. Higher-order moments of the distribution of earnings innovations show cyclical movements in Brazil that are similar to those in developed countries like the US. Earnings mobility is comparatively high, especially at the bottom of the distribution. Compared with those in the formal sector, earnings in the informal sector are more volatile. Workers who switch between sectors experience earnings innovations that have a positive mean and are positively skewed when moving to the formal sector but have a negative mean and are negatively skewed when moving to the informal sector. Since the early 2000s, a secular shift of employment toward the less volatile formal sector has contributed to a decline in the economy-wide volatility of earnings.

Decline In Wage Inequality In Brazil

Decline In Wage Inequality In Brazil

Author: Sergio Firpo

Publisher:

Published: 2019

Total Pages: 38

ISBN-13:

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In the last decades, Brazil experienced a historical decline in its wage inequality level, particularly in the first decade of the 21st century. This paper reviews the literature that attempted to explain the observed pattern. It considers mechanisms related to the supply and demand for labor, as well as institutional factors. The paper argues that the favorable economic environment in the period, combined with increases in the minimum wage, higher formalization, and a larger supply of skilled workers led to a compression in wages. However, some aspects of the decline in wage inequality are still unanswered, such as the causes behind a reduction in the experience premium and interfirm payment heterogeneity, as well as the exact role of technological changes. The paper concludes by discussing future trends in wage inequality in Brazil.


Book Synopsis Decline In Wage Inequality In Brazil by : Sergio Firpo

Download or read book Decline In Wage Inequality In Brazil written by Sergio Firpo and published by . This book was released on 2019 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the last decades, Brazil experienced a historical decline in its wage inequality level, particularly in the first decade of the 21st century. This paper reviews the literature that attempted to explain the observed pattern. It considers mechanisms related to the supply and demand for labor, as well as institutional factors. The paper argues that the favorable economic environment in the period, combined with increases in the minimum wage, higher formalization, and a larger supply of skilled workers led to a compression in wages. However, some aspects of the decline in wage inequality are still unanswered, such as the causes behind a reduction in the experience premium and interfirm payment heterogeneity, as well as the exact role of technological changes. The paper concludes by discussing future trends in wage inequality in Brazil.