WAGE INEQUALITIES AND PRODUCTIVITY DIFFERENTIALS IN BRAZIL

Resumo

This paper discusses the relationship between the elasticities of wages and productivity with respect to human capital. The goal is to search if there is a distortion on the expected relationship between these two variables, given market forces and a selfish behaviour by agents. A general equilibrium, overlapping generation model that can capture the relationship between these two elasticities is presented. Two equations that emerge from this model are estimated using Brazilian data. The results indicate that Brazilian labour market attenuates income inequality, transferring income from more to less qualified workers, similarly to what happens in European labour markets.