Income Inequality: the Education in Question

ABSTRACT:

The work discusses the effect of education on income inequality in two Brazilian cities, Rio de Janeiro and Sao Paulo, contrasting analytical models: the model related to the theory of human capital and the overeducation, required education and undereducation (ORU) model. This contrast seeks to present empirical evidence that the education required by occupation is more relevant than individuals' level of education. However, in both situations the effect of education changes depending on the labor market condition: in a high unemployment one, the effect of education is higher; the opposite is evident when the unemployment rate is lower. Data from the National Household Sampling Survey of the Brazilian Institute of Geography and Statistics of 2002, 2007 and 2013 were used

Keywords:
Individuals' education; Required education; Overeducation; Undereducation; Labor market