Firms and the Decline in Earnings Inequality in Brazil

Author/Editor:

Jorge Alvarez ; Felipe Benguria ; Niklas Engbom ; Christian Moser

Publication Date:

December 14, 2017

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

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.

Series:

Working Paper No. 17/278

Subject:

English

Publication Date:

December 14, 2017

ISBN/ISSN:

9781484333037/1018-5941

Stock No:

WPIEA2017278

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

59

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