An analysis of the earnings in Brazilian metropolitan areas by color and gender from the view of mobility in the 21 st century 1 Mariangela Furlan Antigo – Universidade Federal de Minas Gerais Daniela Goes Paraiso Lacerda – Fundação João Pinheiro Carolina Guinesi Mattos Borges – Universidade Federal de Minas Gerais Sandro Eduardo Monsueto – Universidade Federal de Goiás Abstract Labor income inequality in Brazil dropped in the first decade of the XXI century, benefiting the population of six Brazilian metropolitan regions contemplated in the analysis, namely, Belo Horizonte, Porto Alegre, Recife, Rio de Janeiro, Salvador e São Paulo. Despite this scenario of improvement, differences are still seen when individuals are considered by gender and color. Based on possible relations between distribution and income mobility, an analysis is carried out on how mobility, at different points of distribution and combined with gender and color traits, have an influence on the reduction or maintenance of inequality. By using data from the Monthly Employment Survey, the results of mobility indicators and quantile regressions have shown that mobility contributed for a more deconcentrated distribution throughout time, in different levels for white and non-white. Non-white have registered higher mobility, especially women, along with smaller levels of inequality and higher concentration at the basis of the distribution. Furthermore, higher levels of ascending mobility for non-white at the basis of distribution might contribute for lesser levels of inequality between groups in the long term. Keywords: mobility; inequality; income; gender; color Introduction The analysis of income mobility allows quantifying how the position of individuals in the distribution alters throughout time, recognizing that the present position is dependent of its previous configuration in the past period. These movements reflect wellbeing of individuals, once higher positions in society tend to be followed by enhancement of this factor. A more deconcentrated income distribution is possible by two means, either by gains for those situated at the basis of the pyramid (ascending income mobility) or by losses for those situated at the top (descending mobility). Analyzing the Brazilian case, it is noticeable that work income inequality in Brazil dropped in the first decade of the XXI century, benefiting the population of six Brazilian metropolitan regions contemplated in the analysis, namely, Belo Horizonte, Porto Alegre, Recife, Rio de Janeiro, Salvador e São Paulo. Despite this scenario of improvement, differences are still seen when individuals are considered by gender and 1 This study had financial support of Fapemig (Edital 01/2014 – Demanda Universal, Process APQ- 02764-14 and Edital 02/2016 - Programa Pesquisador Mineiro - PPM X, Process PPM-00658-16 ). 1
color. If groups present different patterns of mobility, albeit keep the same level of inequality, it is possible that those with higher mobility might present some alterations regarding the individuals located at the top and at the basis of the pyramid. Ascending mobility in the basis, for example, might compensate inequality throughout time, fostering income dislocation amongst those with lower income level. Given that, based on the possible relations between distribution and income mobility and non-homogeneity of Brazilian sub-groups regarding income, it is desirable to evaluate how individual factors, namely, gender and color, might explain part of the mobility between different distribution strata and its relation with inequality. In general terms, mobility indicators and quantile regressions, obtained from Monthly Employment Survey (PME) from the Brazilian Institute of Geography and Statistics (IBGE), shown that mobility contributes for a more deconcentrated distribution throughout time, in different levels for white and non-white. The non-white has registered more mobility, mostly for women, along with lower levels of inequality and higher concentration at the basis of the wage pyramid. Further, higher levels of ascending mobility for non-white at the basis of distribution might contribute for lower inequality between groups in the long term. Theoretical Framework The income distribution portrays the concentration of individuals in different levels of income in each time. Its usual measurement in a point in time or the use of repetitive cross section does not allow inferences about the dynamic of income patterns. To visualize the difference between the inequality and mobility analysis, consider two societies A and B, given that A shows a more stiff structure than B. Suppose that the cities present different patterns of mobility, yet keep the same indicators of income inequality in time. In society A, poorer individuals will continue to be poor and rich will continue in the same point of distribution, meanwhile, society B may present change in the composition of poor and rich that is not depicted by inequality measurements. In case the same individual in society was considered throughout time, it would be possible to verify, for example, if those initially poorer stays on that position or if, for instance, the economic growth would originally benefit more the poorer individuals than the richer. The length in which high inequality can be seen as a minor consequence for society has been recently a major object of study. That occurs as long as it is accompanied by increasing change of intergenerational mobility (CORAK, 2004). If that happens, the mobility compensates inequality as far as income variations furthers income movement for those positioned in the basis of distribution. Gottschalk e Moffitt (1994), Gittleman e Joyce (1996) e Buchinsky e Hunt (1999) research if the increase of income inequality has been accompanied by the increase of compensatory mobility of the individual in income distribution. 2
Hirschman (1973), Ravalion e Lokshin (1999) e Jarvis e Jenkins (1998) suggest that high levels of inequality can or shall be tolerated in societies where the perception of mobility is desirable and possible. However, cases in which high levels of inequality interact with low levels of mobility tend to cause losses of population wellbeing. Gacitua-Marió e Woolcock (2005) highlights that, even in countries that are relatively similar by economic standards, severe barriers to mobility, either social or of other kinds, might concur to exclude certain groups from opportunities access in the job market. Therefore, it becomes possible to measure the length in which long term income, perceived as the mean of the period in consideration, is more or less equally distributed than the income in a given point in this same period. Therefore it better reflects the measurement of population wellbeing. Shorrocks (1978) enhances that mobility is related to levels under which equalization occurs when a period of time is extended. Accordingly, it might be seen as an important society feature regarding the expansion of opportunities in the labor market, in which a higher income mobility might result its bigger convergence, and thus in an improvement of the society income distribution throughout time. Furthermore, the income distribution might present a misleading portrait upon long term inequality, since individual qualification may alter their position in long term income distribution. In the case of young individuals, for example, who tend to be located at the base of the distribution, as a result of low accumulation of human capital, future gains of experience throughout the years might positively impact their professional career ascension, which alters the long term disposition. In case mobility affects initially solely specific groups deprived from a minimum standard of living, albeit incorporating qualification gains or compensatory policies, this may result smaller long-term inequality, and, for a given income inequality, this might express a compensatory effect as a result of ascending mobility for smaller incomes. Therefore, an analysis of the dynamics of income mobility becomes relevant, as it enables measurement levels in which mobility tend to equalize or not the long term income distribution. To measure this behavior, a long wide temporal horizon is necessary. Hence, any observed change in the income distribution might be the outcome of a short period event that might not consolidate in the long term. According to Solon (2002), an increase in inequality overtime might derive from an increasing differential in the income of the poorer and richer individuals. This sustains a long term increasing inequality. Amongst the factors that explain the cross section inequality, the author shows that any difference between individual features of the same cohort might lead to a permanent variation of income, thus expanding inequality in the long run. A higher educational level, for example, might lead a specific cohort to obtain higher incomes. In addition, individuals may endure an increase in their income volatility, albeit not sustained overtime. In that case, long term inequality might be little affected. 3
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