Global Journal of Human Social Science, E: Economics, Volume 23 Issue 3

In the lower tail of the wage distribution, the minimum wage represents the price of less skilled work and an index for other workers. On the other hand, a positive variation in the minimum wage has an effect not only on the lower tail of the wage distribution, but also on the upper tail, since employers can replace less qualified workers with more qualified ones, in addition employers can choose to maintain the wage differential between the more and less qualified, preserving the incentive for the latter (FOGUEL; 1998, NEUMARK; WASCHER, 2008; CUNHA; VASCONCELOS, 2012). Inequality reduction is the greatest rate at Theil, which is more susceptible to changes on the upper tail of the distribution. This is in line with the negative variation on the last percentile analyzed and, on the other hand, major positive variations were on those elements with lower wages. Therefore, the highest wages reduced or increased less and the lowest wages approached the highest, reducing inequality. These changes were also identified through appropriate proportion on percentiles of wage distribution, where lower wages showed positive variation and the last, a negative variation. Nevertheless, differences were still substantial. This reduction in inequality on wage distribution can be also observed through lower wage differentials estimated through Mincerian equation, as on Table 3, in which controls related to individuals’, workplace and spatial characteristics were considered as well as variables associated to occupational groups. Table 3: Wage differentials according to hourly wage, Brazil, 1985-2015 Variable 1985 1995 2005 2015 Managers 1.4605 *** 0.8136 *** 0.8001 *** 0.6651 *** Professionals/Technicians 1.1803 *** 0.5527 *** 0.5612 *** 0.4573 *** Administrative 1.0361 *** 0.3875 *** 0.3002 *** 0.1588 *** Sales 0.7228 *** 0.2677 *** 0.2017 *** 0.0779 *** Production and Operations 0.5582 *** 0.1838 *** 0.2500 *** 0.1701 *** Agricultural 0.6362 *** 0.2025 *** 0.1309 *** -0.0056 Others services 0.6918 *** 0.1919 *** 0.1314 *** 0.0528 *** Sex 0.3354 *** 0.3491 *** 0.2603 *** 0.2335 *** Age 0.0931 *** 0.0653 *** 0.0522 *** 0.0318 *** Age 2 -0.0010 *** -0.0007 *** -0.0005 *** -0.0003 *** Educational level LSS 0.1827 *** 0.1633 *** 0.1496 *** 0.0881 *** SSG 0.4423 *** 0.3713 *** 0.3085 *** 0.1945 *** SMC 0.4523 *** 0.6516 *** 0.4621 *** 0.2901 *** CLG 0.9916 *** 0.9612 *** 0.7692 *** 0.4651 *** GTC 1.4462 *** 1.4670 *** 1.2409 *** 0.9067 *** Formal 0.3380 *** 0.2415 *** 0.3186 *** 0.2335 *** Sectors Industrial 0.3084 *** 0.3987 *** 0.1371 *** 0.0511 ** Sales and services 0.1535 *** 0.2425 *** 0.0845 *** 0.0088 * Urban 0.1133 *** 0.1235 *** 0.0499 *** 0.0760 *** Metropolitan 0.1893 *** 0.1725 *** 0.1282 *** 0.0907 *** Region Northeast -0.3351 *** -0.2251 *** -0.2457 *** -0.1569 *** Southeast -0.0957 *** 0.1968 *** 0.0820 *** 0.1095 *** South -0.0980 *** 0.1602 *** 0.0979 *** 0.1659 *** Central West -0.0501 *** 0.0841 *** 0.1038 *** 0.1693 *** Constant -2.0574 *** -1.2632 *** -0.8021 *** 0.1905 *** Observations 111.687 65.219 91.750 83.832 R 2 0.5945 0.5559 0.4994 0.4586 Source: PNAD data. ∗∗∗ p<0.01, ∗∗ p < 0.05, ∗ p<0.1. Every occupational group had their estimated differential reduced when compared to the ones from individuals placed on domestic activities, which is the reference category. Greater differentials for those in managerial, professional, and technical activities were maintained, but on other occupational groups there was a lower differential when compared to the category of reference. From 1985 to 1095, there was a reduction in every wage differential, although it was more intense on occupations with lower wages. During the second period, from 1995 to 2005, there was a relative maintenance of higher differentials and even an increase on differentials from professional and technician occupations, that are non-routine and abstract. There was also an increase on differentials from production and operational occupations, that are considered routine and manuals. Lastly, from 2005 to 2015, there was a reduction on every occupational differential and agricultural workers had negative differential when compared to workers on domestic service. Thus, from 1985 to 2015, there was a smaller reduction on wage differential from occupations with bigger premiums, for example, managers had a reduction of -54.5% while other services had -94.4%. © 2023 Global Journals Volume XXIII Issue III Version I 17 Global Journal of Human Social Science - Year 2023 ( )E Occupational Polarization in Brazilian Labor Market, 1985-2015