Basic education and income inequality in Brazil

World Bank eBooks, 1977

This paper attempts to elucidate the long-term impact of basic education on income inequality in Brazil. It does so, first, by examining how investment in basic education affect incomes and, second, by assessing the extent to which government involvement in the financing of education services and the taxing of the returns to education investment contributes to achieve a more equitable ;Iqtribution of income. On the basis of the empirical evidence available in Brazil, it is possible to suggest that (i) education per se cannot significantly reduce inequality, (ii) government policies in terms of education subsidies and taxes on lifetime earnings do not show a clear redistribution pattern, and (iii) there exists effective policy tools in the area of employment, education wastage, cost recovery practices which could help bridge the gap between rates of return to education and reduce income inequality. Thte attached paper is a fifth and last in a series of reports prepared in connecLion with the research program being carried out by the Education Department (Central Projects Staff) on education finance in Latin America.

Poverty in Brazil. Concepts, Measures, Policies , 2021

The huge and quite resilient level of income inequality in Brazil had been declining steadily since 1997. This text analyses the increase in years of schooling, the changes that occurred in terms of labor gains according to years of schooling and how this affected income inequality before the 2014 crisis struck. Access to education had much improved, but the quality of education had remained unsatisfactory. This quality of education problem was partly compensated for by a sustained policy of increasing the real value of the minimum wage. As a result, the period from 1997 to 2013 was very favorable to those at the lower income strata, steadily increasing their labor and social assistance incomes, thus improving the income distribution accordingly. When, because of several macroeconomic woes that had been accumulating since the 2007 global crisis, a fiscal crisis of our own hit in 2014, the impact on poverty and inequality soon appeared. Now the country faces the challenge of trying to regain the economic growth track and recover the social progress lost, at a time when the economy is plagued by deficient productive infrastructure, a shameful political establishment, a lowly qualified workforce, and last, but not least, the crippling effects of the coronavirus. Unpublished paper presented at the XXVII IUSSP International Population Conference, Busan, Korea, 2013.

Peabody Journal of Education, 2001

The educational attainment of Brazil's labor force has the authors argue, the marginal reduction in wage gradually increased over the past two decades. At the inequality that occurred in this period was linked same time, the government has pursued a series of primarily to a reduction in the returns to schooling and economic structural adjustment policies. Blom, Holm-only secondarily to a more equitable distribution of Nielsen, and Verner investigate how these simultaneous schooling. advances have altered the relationship between labor The findings suggest that the supply of highly skilled market earnings and education. labor is inadequate to meet demand. That suggests a They find that the returns to education in the labor need for policy action aimed at increasing access to and market fundamentally changed between 1982 and 1998. completion of tertiary education. Increasing the supply While the returns to tertiary education increased sharply, of highly skilled labor would improve prospects for both the returns to primary education dropped by 26 percent economic growth and reduced wage inequality. and those to lower secondary by 35 percent. Moreover, This paper-a product of the Education Sector Unit, Latin America and the Caribbean Region-is part of a larger effort in the region to assess the need for expansion of the education system, in particular, tertiary education. Copies of the paper are available free from the World Bank,

Journal of Development Economics, 1991

Household survey data demonstrate that Brazilian males born between 1925 and 1963 experienced steady increases in mean schooling and significant declines in schooling inequality. The variance in years of schooling increased for cohorts born up until 1950, with steady declines for more recent cohorts. Decomposition of a standard human capital earnings equation indicates that trends in schooling tended to reduce earnings inequality from 1976 to 1985, due to reductions in both the variance of schooling and in returns to schooling. These improvements were more than offset, however, by increases in other sources of inequality. Although the net increase in earnings inequality from 1976 to 1985 is disturbing, the reduction in schooling inequality represents a fundamental improvement in the determinants of earnings inequality in Brazil that will have beneficial effects for decades.

CEPAL Review

Education and income distribution in urban Brazil,

SSRN Electronic Journal, 2000

The Journal of Development Studies, 2006

This paper estimates changes in the rates of return to human capital across the earnings distribution using data from over a 10-year period for Brazil. It uses these estimates to simulate the separate impacts of changes in returns to skills and changes in the supply of skills on earnings inequality. Evidence points strongly to growing inequality in rates of return to education in Brazil. This finding suggests that recent macroeconomic and trade reforms have been of most benefit to the skilled rather than the unskilled. Supporting evidence points to an improved competitiveness in the labour market, with workers increasingly rewarded for productivity. However, although increases in returns to education are more pronounced at the top of the earnings distribution, this did not in practice led to increased inequality. This is because levels of education and other labour market-rewarded endowments have increased and offset the rate of return effect. Appropriate education policy is therefore an essential partner for macroeconomic and trade reform if a developing economy is to avoid worsening income inequality.

2006

This paper investigates the sources of wage inequality across Brazilian regions. Duarte, , using a semi-parametric approach based on DiNardo, , show that income differences across the Southeast and Northeast can be explained by educational disparities across their population. This result implies that any policy recomendation should prescribe direct investments in education in order to narrow the regional income gap. In this paper we apply the methodology developed by Machado and Mata (2004), based on quantile regression and resampling techniques, for the metropolitan areas of Brazilian Southeast and Northeast. The technique allows us to decompose the wage inequality across regions into a part that can be attributed to changes in workers' observable characteristics and another to changes in the returns to these characteristics. First we show that the difference between NE and SE wage distribution has a higher mass on the lower tail, and lower density on the upper tail, resulting from the well known fact that Northeast have a higher number of people living on poverty and lower number of people on high paying occupations compared to Southeast. Both returns to skills and workers' observed characteristics have an impact on this result. However, different from what Duarte et al show on their paper, schooling did not respond for this wage inequality across the two regions. Returns to schooling did have a higher impact on wage inequality than the distribution of education per se. These results imply that investments on education alone may not be enough to narrow regional income inequality since the availability of capital and quality of education may be driving those results.

Review of Development Economics, 2019

Latin America, which is a region known for its high and persistent income inequality levels, experienced a significant decline in income inequality since the second half of the 1990s. Brazil is a particularly interesting case in Latin America. While the country presented notable economic growth and improvements in income distribution in the early 2000s, Brazil continues to experience high levels of income inequality in comparison with other Latin American or advanced economies. This research contributes to the literature by examining the key drivers of income distribution and the degree of persistence of income inequality among Brazilian states. This research also improves upon previous works by using more recent and comprehensive data and addressing concerns regarding heterogeneity and endogeneity by using the system GMM estimation method. Our findings show that income inequality is highly persistent across Brazilian states and that government policies including income transfer programs made important contributions to reduce income inequality in Brazil. This study also shows that the decline in labor income ratios between different ethnic groups and the increase of the share of formal jobs in the labor market contributed to reduce income inequality.

Revista Brasileira de Economia, 2006

This paper examines the impact of the education composition of the workforce and of the changing returns to schooling on the dispersion of male labor earnings in Brazil in the last twenty years. It applies a quantile regression approach to a polynomial on age, time and interactions, using repeated cross-sections of a large Brazilian annual household survey.