Age, Experience, and Schooling: Decomposing Earnings Inequality in the United States and Brazil

This article analyzes age and experience profiles of earnings inequality for U.S. and Brazilian males. Decomposition of the inequality profiles using a standard human capital earning equation clarifies the determinants of cross-sectional inequality profiles and demonstrates a number of important differences in the shape of the two countries' profiles and in their underlying components. Most dramatic are Brazil's higher returns to schooling and higher variance in years of schooling, both factors contributing to the significantly higher level of income inequality in Brazil. Changes in the distribution of schooling across cohorts are shown to play a central role in explaining cross-sectional inequality profiles within each country and differences in earnings inequality in the United States and Brazil.