The Evolution of Industrial Wage Inequality in Mexico and Brazil : A Comparative Study

We use industrial data to derive estimates of the pattern of change in wage inequality in Mexico and Brazil. Using the group-wise decomposition of Theil's T statistic we present monthly series of measurements of change in the dispersion of industrial wages for Brazil (1976 through 1995) and for Mexico (1968 through 1995). Both countries show increases in wage dispersion over time, and we find a strong negative correlation with the rate of real economic growth, suggesting that real per capita income growth is an important determinant of movements in inequality. Heterodox stabilization plans apparently reduce inequality in the short-run