Women’s formal and informal labour in Brazil: an inequality decomposition (2000-2010)

Abstract

Purpose The purpose of this paper is to examine the effects of changes in the relative composition and in the segmentation between formal and informal labour on earnings differentials among women over the last decade in Brazil. Design/methodology/approach The authors follow Machado and Mata’s method to decompose the changes along the earnings distribution, with correction for sample selection and using microdata from the Demographic Census of 2000 and 2010. Informal labour was divided into informal salaried labour and self-employment, and both groups were compared with the formal labour separately. Findings The results indicate that, in both cases, an increase in earnings differentials in the bottom of the earnings distribution due to segmentation, suggesting that the returns to formal labour have grown relatively to informal labour during the period. On the other hand, earnings differentials decrease as one moves up the earnings distribution due to the composition effect, which is stronger on the top of the distribution relatively to the bottom. Furthermore, there are compensating differentials for self-employed women above the 30th quantile, which contributed to reduce the inequality between this group and formal workers. Originality/value The paper contributes to a better understanding of the changes taking place in female labour, shedding some light on how they affect different points along the earnings distribution. Furthermore, the adopted approach proposes a new application for the correction of sample bias in the context of quantile regression by employing a logit multinomial, and using the Demographic Census data.