Education, Earnings, and Inequality in Brazil, 1982-98 : Implications for Education Policy

Abstract

The educational attainment of
 Brazil's labor force, has gradually increased over the
 past two decades. At the same time, the government has
 pursued a series of economic structural adjustment policies.
 The authors investigate how these simultaneous advances have
 altered the relationship between labor market earnings, and
 education. They find that the returns to education in the
 labor market, fundamentally changed between 1982, and 1998.
 While the returns to tertiary education increased sharply,
 the returns to primary education dropped by 26 percent, and
 those to lower secondary, by 35 percent. Moreover, the
 authors argue, the marginal reduction in wage inequality
 that occurred in this period was linked primarily to a
 reduction in the returns to schooling, and only secondarily,
 to a more equitable distribution of schooling. The findings
 suggest that the supply of highly skilled labor is
 inadequate to meet demand. That suggests a need for policy
 action aimed at increasing access to, and completion of
 tertiary education. Increasing the supply of highly skilled
 labor, would improve prospects for both economic growth, and
 reduce wage inequality.