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Education, cost of living and regional wage inequality in Brazil

Carlos R. Azzoni,

[2001]

Abstract: The objective of this paper is to analyze wage inequality among the 10 largest metropolitan regions in Brazil in the 90’s. We assess to what extent worker characteristics (education, age, gender, race, position in the family) and job characteristics (occupational position, sector, experience) can explain wage inequality. The analysis is made both with regional-nominal and with regional-real wage data. In the first case a national price index is used to deflate the data; in the second case regional price indexes are added to the national price index in order to control for differences in cost of living among regions. Wage differentials in Brazil were slightly reduced when the controls were introduced, but the remaining inequality was still high. Considering the differing cost of living levels, the results indicate that they do have a role in explaining wage inequality in Brazil, but even after controlling for that factor, the remaining regional differentials are still important.

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