Women in the Workforce: A Decomposition of Female Racial Wage Gaps in Brazil

Abstract: This paper analyses how racial wage gaps amongst women in the Brazilian urban labour market have evolved in response to a strong increase in workers’ skills between 2001 and 2011. For this purpose, Melly (2005, 2006) quantile decomposition frameworks will be applied using PNAD data. In so doing we acknowledges a gap in the literature by focusing on women instead of men, extending wage decomposition frameworks applied to Brazil and updating wage gap estimates by using the latest 2011 data. Our conclusions thus coincide with Salardi (2013) in that increased female labour force skills are the strongest factor determining the reduction, albeit maintenance of glass ceiling effects. However contrasting previous findings by Foguel & Acevedo (2006) we find that the combination of higher skills, greater returns to those skills and changing unobserved factors drive, in conjunction, the lowering of racial wage gaps around the median of the earnings distribution. Finally our key contribution to the existing empirical literature in Brazil reveals that is has been mostly the combined effects of higher skills and unobserved economic wage structures which mostly explain the unexpected rise of sticky floor effects amongst women in the workforce.