Education expansion and decline in tertiary premium in Brazil: 1995-2013

ABSTRACT

Using Brazil National Household Survey 1995–2013 data, this paper examines how the education expansion in Brazil impacted the tertiary premium through the interaction of relative supply and relative demand. The identification of the impact of relative demand on education premium provides an empirical testing of the Heckscher-Ohlin model in the context of Brazil. The results suggest that the change in relative supply had converged the education premium thus converged the wage income distribution. The results also show that there was no decrease in relative demand for skilled workers in Brazil in the past two decades, which is inconsistent with what the Heckscher-Ohlin model predicts.

KEYWORDS:

• Education expansion
• tertiary premium
• Heckscher-Olin model
• Brazil

JEL CLASSIFICATION:

• I20
• J24
• J31

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ The composition-adjusted relative return represents the premium for a fixed composition of workers – the average composition over the 1995–2013 period (Autor, Katz, and Kearney, 2008); thus, the changes in composition-adjusted tertiary premium reflect only the change in wage structure but not changes in the composition of workers’ characteristics. Correspondingly, the relative supply measure is in efficiency units. These are conventions for analysing the impact of supply and demand on relative wages (Acemoglu and Autor 2011; Autor 2014; Autor, Katz, and Kearney, 2008; Delong, Goldin, and Katz 2003; Goldin and Katz 2007; Katz and Murphy 1992), which allows us to filter out the possible impact of deterioration of workers’ average quality while analysing the impact of supply and demand. Please see the appendix for details about calculating the composition-adjusted relative return and the relative supply in efficiency unit.