Post on 05-Jul-2020
Economic sector,demographic composition,
educational attainment,and earnings in Brazil
Samantha Faustino(samanthahaussmann@cedeplar.ufmg.br)
Bernardo Queiroz(lanza@cedeplar.ufmg.br)
Ernesto Amaral(amaral@tamu.edu)
Guilherme Gonçalves(gquaresma@cedeplar.ufmg.br)
Objective• Brazil has been experiencing major changes
– Population aging– Educational improvement– Increase of workers in the formal economic sector– Oscillation of earnings by economic sector
• Do changes in demographic, educational, and economic sector compositions affect earnings over time?– Estimate associations of individual- and area-level
variables with individual earnings of male workers2
Previous studies• Brazil still experiences a high rate of jobs in the informal
economic sector, which is a challenge to the economy (Ulyssea 2005; Ramos 2002; Mello, Santos 2009; Barbosa Filho, Moura 2015; Botelho, Ponczek2011; Carneiro, Henley 2001)
• Most self-employed workers in Brazil have low education, evade tax, and are unlikely to employ other people or expand their businesses (Narita 2013; Botelho, Ponczek 2011; Bargain, Kwenda 2014)
• Informal firms are small and less productive businesses with low per capita income (Barros, Ulyssea 2010)
• Previous analyzes have mixed results about whether workers in formal jobs receive higher wages than in informal jobs, controlling for their productivity
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1980, 1991, 2000, 2010 Censuses• Dependent variable
– Natural logarithm of individual earnings of Brazilian
male workers on primary occupation
• Independent variables– 16 age-education indicators (G)
• Age: 15–24, 25–34, 35–49, 50–64
• Education: less than primary, primary, secondary, university
– Distribution of the male population in 16 age-
education groups for 502 areas (Xga)
– Controls: race/color, marital status, religion, region4
OLS models1. Binary variable for economic sector (Formal)
log(Yi) = β0 + β1Gi + β2Xga + β3Formali + εi
2. Proportion of formal workers by area (Pa)log(Yi) = β0 + β1Gi + β2Xga + β3Pa + εi
3. Interaction of sector and age-education group (I)log(Yi) = β0 + β1Gi + β2Xga + β3Formali + β4Ii + εi
4. Only formal economic sectorlog(Yi) = β0 + β1Gi + β2Xga + εi
5. Only informal economic sectorlog(Yi) = β0 + β1Gi + β2Xga + εi
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Description of sample
6
Year
Informaleconomic
sector(%)
White(%)
Married(%)
Protestant(%)
Samplesize
1980 22.7 61.6 56.3 5.9 4,309,110
1991 30.8 56.2 66.8 7.9 2,775,824
2000 40.9 57.8 48.7 13.5 3,305,805
2010 33.5 51.0 43.2 20.3 3,708,484
• We analyze only males in urban areasSource: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
Real earnings by economic sector
7
0.00
250.00
500.00
750.00
1,000.00
1,250.00
1,500.00
1,750.00
2,000.00
1980 1991 2000 2010
Mon
thly
Bra
zilia
n R
eais
Year
Informal Formal
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
8
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
1980 1991 2000 2010Year
Less than primary Primary Secondary University
Male age-education compositionFormal sector, age 25–34
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
9
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
1980 1991 2000 2010Year
Less than primary Primary Secondary University
Male age-education compositionFormal sector, age 35–49
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
10
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
1980 1991 2000 2010Year
Less than primary Primary Secondary University
Male age-education compositionInformal sector, age 25–34
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
11
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
1980 1991 2000 2010Year
Less than primary Primary Secondary University
Male age-education compositionInformal sector, age 35–49
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
Model results• Higher earnings: older, better educated, white,
married, non-Protestant, South, and Center-West regions
• Proportions of people in age-education groups tend to have negative associations with earnings– Mostly among older workers and those with
secondary education
• Now focus on results about economic sector...
12
Equation 1: Formal vs. Informal
13
1.39
1.24
1.30 1.31
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
1.45
1980 1991 2000 2010
Expo
nent
ial o
f coe
ffici
ent
Year
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
14
0.48
0.80
0.42
0.74
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1980 1991 2000 2010
Elasticity
Year
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
Equation 2: Effects of proportionin the formal sector (Pa)
15
-1.00
-0.75
-0.50
-0.25
0.00
0.25
0.50
0.75
1.00
1.25
1980 1991 2000 2010
Elas
ticity
Year
Less than primary Primary Secondary University Reference
Equation 4: Effects of group proportions (Xga)Formal sector, age 25–34
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
16
-1.00
-0.75
-0.50
-0.25
0.00
0.25
0.50
0.75
1.00
1.25
1980 1991 2000 2010
Elas
ticity
Year
Less than primary Primary Secondary University Reference
Equation 4: Effects of group proportions (Xga)Formal sector, age 35–49
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
17
-1.00
-0.75
-0.50
-0.25
0.00
0.25
0.50
0.75
1.00
1.25
1980 1991 2000 2010
Elas
ticity
Year
Less than primary Primary Secondary University Reference
Equation 5: Effects of group proportions (Xga)Informal sector, age 25–34
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
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-1.00
-0.75
-0.50
-0.25
0.00
0.25
0.50
0.75
1.00
1.25
1980 1991 2000 2010
Elas
ticity
Year
Less than primary Primary Secondary University Reference
Equation 5: Effects of group proportions (Xga)Informal sector, age 35–49
Source: 1980, 1991, 2000, and 2010 Brazilian Demographic Censuses.
Discussion• Informal sector tends to have younger and less
educated workers with lower earnings• Increase in proportion of workers in the formal
economic sector had positive effects on earnings– Indication of relatively integrated labor market,
instead of presenting two segmented sectors
• Effects of proportions in age-education groups vary more among workers in the informal sector– Indication of higher levels of economic inequality
among these workers in recent years
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