An inequality decomposition between formal employment and self-employment in Brazil (2000-2010): evidences from quantile regressions

Abstract

This paper examines the effects of changes in the relative composition and segmentation between formal employment and self-employment on earnings inequality between 2000 and 2010, separately by gender. We use microdata from Demographic Census and the method of Machado and Mata for the decomposition of differentials, from the quantile regressions with correction of sample selection. For men and women, there is an increase in the differential at the bottom of the earnings distribution, due to the segmentation effect, suggesting a relative appreciation of the formal employment. However, there is a progressive reduction in the differentials, from the 25o quantile, due to the composition effect, which is also mitigated by greater relative appreciation of the self-employment at the top of the distribution. Furthermore, there are important differences by gender in the level and variation of these components in the period and along the earnings distribution.