Household income inequality and economic growth in Brazil

Abstract

This paper investigates the relationship between household income inequality and economic growth in Brazil controlling for a large number explanatory variables, which were divided into three groups: individuals’ inherent characteristics, individuals’ acquired characteristics and a set of characteristics related to the economic environment of the country. Using the household income concept to urban areas only, the methodological econometric framework was based upon simultaneous equation models applied in cross-sectional data for brazilian states with some extensions to different income percentiles. The results corroborate with some studies, but contradict several others, concerning labor market segmentation, discrimination and access to education and their impacts over inequality, but shows relevant effects about government intervention. It is also found that some of those particular variables affect in different ways the income inequality in each income percentile.