Convergence Clubs of Income Inequality in Brazilian Municipalities

Abstract

This work aims to test for convergence of income inequality in Brazilian municipalities, from 1991 to 2000, under the focus of convergence clubs, and to quantify the contribution of education and the pro¬file of the labor income and government transfers in this process. These clubs have been endogenously identified using a threshold effect model, with the initial period Gini index as threshold variable. In the six convergence clubs identified, empirical evidence shows a convergence process of income distribution inequality in Brazil. In this process, labor income has been more significant for the inequality reduction than income from government transfers, while the average number of study years has also contributed for reducing inequality in the municipalities with lower initial inequality.