This initiative is part of a series of ongoing actions at the IDB aimed at building and disseminating greater knowledge on the causes and consequences of social exclusion due to race or ethnic background in the region, and the range of policies and programs available for combating it. These initiatives are an integral part of the Bank?s effort to consolidate a regional consensus regarding the causes, costs, and possible solutions for ethnic or racial social exclusion.

The current research of the Unit focuses on Brazil, the country with the largest population of Afro-Latin descent and one of the few countries in the region that collects information on race in household surveys. The study merges household survey data on workers? earnings, human capital and job characteristics with time series data on the pupil/teacher ratios by state during 1940-1990. These data are used to investigate the role of race, family background and differences in both the quantity and quality education and their market returns (prices) in earnings inequality between whites and afro-Brazilians, with emphasis on the role of unobservable heterogeneity (arising from differences in "market ability", which may include innate ability and/or family connections).

The analysis is based on the estimation of quantile Mincer earnings regressions, this procedure permits the identification of the relative importance of the above factors in accounting for racial earnings differentials among workers at all points of the wage distribution not just for average wages.

The preliminary findings suggest that the significant advantage of whites in the quantity and quality of education they receive vis a vis Afro-Brazilians explains a great portion of racial earnings inequality, with the intergenerational disadvantage of Afro-Brazilians in family human capital endowments also playing an important role. We also find patterns of heterogeneity in the racial gaps in education returns that are consistent with skin color playing an important role in access to better-paying jobs, conditional on observed worker characteristics. The results point to the need and relative importance of various policies to promote human capital accumulation and labor market institutions that reduce the disparities putting the Afro-Brazilian population at a disadvantage in the whole spectrum of jobs in the Brazilian labor market.

Last updated: 04/26/07