Firms and the decline in earnings inequality in Brazil

Jorge Alvarez, Felipe Benguria, Niklas Engbom, Christian Moser

Research output: Contribution to journalArticlepeer-review

31 Scopus citations


We document a large decrease in earnings inequality in Brazil between 1996 and 2012. Using administrative linked employer- employee data, we fit high- dimensional worker and firm fixed-effects models to understand the sources of this decrease. Firm effects account for 40 percent of the total decrease and worker effects for 29 percent. Changes in observable worker and firm characteristics contributed little to these trends. Instead, the decrease is primarily due to a compression of returns to these characteristics, particularly a declining firm productivity-pay premium. Our results shed light on potential drivers of earnings inequality dynamics.

Original languageEnglish
Pages (from-to)149-189
Number of pages41
JournalAmerican Economic Journal: Macroeconomics
Issue number1
StatePublished - Jan 1 2018

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (all)


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