Poles Apart? Living Standards and Inequality by Labour Market Outcomes in Brazil and Sweden, ca. 1830–1920

Abstract

AbstractIs the present-day pattern of high inequality in South America and low inequality in Scandinavia deeply rooted in the past or the outcome of developments during the twentieth century? In this chapter, we examine this issue by providing new evidence on real and relative wages in Brazil and Sweden between 1830 and 1920. We find that real wages were comparable in the two countries until the late 1880s, after which the living standards of Swedish workers surged, while they stagnated in Brazil. As real wages followed the trajectory of GDP per capita in both countries, we find little evidence of economic dualism in explaining the development of wages. However, the gap in GDP per capita was much larger than for real wages prior to the 1880s, so we also examine the spread of earnings across space, skills, and sex in the early twentieth century. Regional inequality was greater in Brazil than in Sweden, while differences across skills and sex were similar. We conclude that the major divergence in workers’ welfare took place in the fourth quarter of the nineteenth century, whereas most other aspects of inequality began to diverge during the twentieth century. The colonial legacies of Brazil and the possibly ancient roots of Swedish equality thus seem to offer little insight into today’s patterns of inequality.