Growth and population ageing in Brazil: fewer, more productive workers?

Abstract

The aim of this study is to understand the movements and evolution of labor productivity and employment in Brazil over time in the face of restricted supply of labor due to population ageing. We isolate age effects from cohort effects, considering the evolution of average wages and the returns to schooling as a labor productivity measure using Pnad microdata from 1992 to 2009. The identification method used follows the popular method of Deaton and Paxson (1994) identifying cohort effects and separating them from the age and period effects on wages under a ciclical period hypothesis. The main results suggest that: i) younger generations are more educated and, thus, more productive; ii) younger generations tend to have higher employment rates, although youth labor share is smaller; and iii) higher education levels do not translate into higher average wages for younger cohorts, which may indicate skilled worker supply growth, overrepresented by younger generations, acted to compress the wages for the younger cohorts.