Services on Demand
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Revista de Economia Contemporânea
Print version ISSN 1415-9848
MACHADO, Ana Flávia; OLIVEIRA, Ana Maria Hermeto Camilo de and ANTIGO, Mariângela. Earning gap evolution between formal and informal sector in Brazil: the role of the non observable characteristics. Rev. econ. contemp. [online]. 2008, vol.12, n.2, pp. 355-388. ISSN 1415-9848. http://dx.doi.org/10.1590/S1415-98482008000200007.
This paper investigates the earning gap between informal and formal sector in urban Brazil in the year 1992, 1998 e 2004. We use quantile regression models to estimate the gap earnings of informal and formal workers and decompose the gap by Oaxaca-Blinder method. The aim is, on one side, to resort to distinct concepts of informal sector, moving on in the understanding of the worker's strategy embedded in the occupational choice. On the other side, to look into the evolution of the gap earnings , isolating the effects of the changes in the endowment of the attributes and of the returns of the same attributes between the two sectors, by quantiles, through time, is another way to analyze the role of the non observed characteristics, explaining how important the occupational choice is. The PNAD is the database. The results show that unobservable characteristics cause the gap reduction in the lower earnings quantiles in the period, especially to the self-em-ployee. We also find that the earnings gaps between formal and informal workers are wider at low conditional quantiles than at high ones.
Keywords : earnings gap; quantile regression; informal sector; labor market.