Inequality Between and Within Firms: Evidence from Brazil

56 Pages Posted: 24 Nov 2015

See all articles by Felipe Benguria

Felipe Benguria

University of Kentucky - Gatton College of Business and Economics

Date Written: November 22, 2015

Abstract

Using a linked employer-employee census for Brazil, this paper studies the relative importance of inequality between and within firms in explaining both levels and changes over time in overall earnings inequality. During the 1999-2013 period, the sharp decline in overall inequality in Brazil has been driven mostly by a drop in between-firm inequality. Within-firm inequality has only fallen slightly, increasing its share in overall inequality to about 44 percent by the end of this period. Estimating an earnings model that decomposes wages into worker and firm fixed effects, I find that between-firm inequality in the cross-section is explained mostly (57%) by variation across firms in the worker fixed effects. The change in between-firm inequality over this period is explained primarily by variation in the worker fixed effects, but the variation in firm fixed effects is almost as important.

Keywords: earnings inequality

JEL Classification: J00, J31

Suggested Citation

Benguria, Felipe, Inequality Between and Within Firms: Evidence from Brazil (November 22, 2015). Available at SSRN: https://ssrn.com/abstract=2694693 or http://dx.doi.org/10.2139/ssrn.2694693

Felipe Benguria (Contact Author)

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States

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