Abstract

Brazil is widely known for its high levels of social inequality and poor rates of education. In the late twentieth century, it was still among the nations with the highest income inequality and lowest average educational levels among the poor in the world. This chapter shows that the standard model of supply and demand for skills appears useful when analyzing the evolution of wage differentials by education and income inequality in Brazil over the last 50 years. The results show that the increase in relative supply of education, especially high school graduates, was responsible for the reduction of wage differentials associated with education throughout the period, which has contributed to the decline in inequality.

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