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Firms and the Decline in Earnings Inequality in Brazil†

Firms and the Decline in Earnings Inequality in Brazil† AbstractWe 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. (JEL D22, D63, J24, J31, L25, M52, O15) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Macroeconomics American Economic Association

Firms and the Decline in Earnings Inequality in Brazil†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7715
DOI
10.1257/mac.20150355
Publisher site
See Article on Publisher Site

Abstract

AbstractWe 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. (JEL D22, D63, J24, J31, L25, M52, O15)

Journal

American Economic Journal: MacroeconomicsAmerican Economic Association

Published: Jan 1, 2018

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