Both in Brazil and in the U.S., labor earnings still represent nearly 80% of the total income reported in household surveys. Thus, labor market will decidedly play a central role on total income inequality. The paper recently published by Alexandre Gori Maia, Arthur Sakamoto (Texas A&M University) and Sharron Wang (Delaware State University) analyzes the relationship between the development of occupational structure and income inequality in Brazil and the U.S.

The authors highlight how earnings inequality is significantly higher in Brazil than in the U.S. The Brazilian labor force faces low levels of education, wages, and occupational skills. These factors together notably reduce the proportion of total income that accrues in the bottom quintiles of the distribution.  At the higher level of economic development found in the U.S., inequality appears to increase largely due to rising inequality among high-skilled employees, which may be a function of unobserved variables such as firm productivity and market advantage.