Declining Inequality in Schooling in Brazil and Its Effects on Inequality in Earnings

Household survey data demonstrate that Brazilian males born between 1925 and 1963 experienced steady increases in mean schooling and significant declines in schooling inequality. The variance in years of schooling increased for cohorts born up until 1950, with steady declines for more recent cohorts. Decomposition of a standard human capital earnings equation indicates that trends in schooling tended to reduce earnings inequality from 1976 to 1985, due to reductions in both the variance of schooling and in returns to schooling. These improvements were more than offset, however, by increases in other sources of inequality. Although the net increase in earnings inequality from 1976 to 1985 is disturbing, the reduction in schooling inequality represents a fundamental improvement in the determinants of earnings inequality in Brazil that will have beneficial effects for decades.