Effects of regional segmentation on wages of workers in Northeast and Southeastern Brazil

Abstract: The aim of this study is to analyze the effects of Brazilian macro-regions, Northeast and Southeast, on workers’ incomes, from the microdata of the PNADC of 2005 and 2015. The results show that, in the Southeast, workers are more educated, white and female, and the most marked differences refer to skin color and level of formalization. The wage returns arising from schooling, female, white skin color and residents of the urban region are lower for workers in the Northeast. The counterfactual approach confirms the unfavorable wage gap to the Northeast, resulting from individual attributes and jobs, and regional attributes, from the dynamics of the locality. There was a reduction in the wage gap between the regions in the period, favored by the significant decrease in the effect of appropriations but regional factors increased their contribution to the wage differential, surpassing the productive attributes, being essentials in explaining the wage inequality between Brazilian regions. These results reinforce the centrality of local specificities in wage issues in the country.