Income Distribution Movements: A Case Study of Brazil
Autor: José Carlos Peliano | Publicado: 2014-11-10T12:06:00-08:00







Income Distribution Movements: A Case Study of Brazil[1]



José Carlos&nbsp;Peliano



Abstract:&nbsp;An income inequality coefficient is developed which includes explicitly the income and frequency series in the analysis to show the movements of the distribution of income. The algorithm gives additional analytical resources to the analysis and permits improving approaches to social mobility, which includes evaluations of inequality. The coefficient has three parts: income effect, which describes the inequality measured by the income shares of the groups in the income series; frequency effect, which describes the inequality measured by the relative frequencies of the groups in the frequency series, and the interaction effect which measures the effect of the interaction of the two variables (income shares and relative frequencies). Temporal evaluation of the frequency effect may point to the movement (“mobility”) of individuals or groups from one distribution to another. Income distribution movements in Brazil were reevaluated and the proposed coefficient compared to other indicators.





1- Social Mobility and Income Distribution



The issue of social mobility began to emerge and take an independent shape based on the inquiries of social scientists in the course of capitalist transformations occurring in Western countries. The missing piece of information was: how do people entering the labor market fare after a few years?



Before that, analyses had generally focused on the functioning of the labor market, the social situation of individuals, workers' incomes and the prevailing income structure. There were, indeed, questions on how to improve income over time, as well as on the more and less frequent occupations in the productive sectors. But social mobility as such was not the focus of sociological or economic studies. That would come later.



A few years after the 1929 Great Depression, and re-emerging after World War II in the main Western countries, motivated especially by the appearance of the "American way of life," one of the concerns of social scientists who analyzed the capitalist world of that time was to know if, when, how and how much people could objectively improve their lives. American sociology took the lead with these questions and theories and soon they spread[2].



How did an American citizen get a good job, buy a new car, rent or buy a nice house with a garden and backyard, equip it well, with a fridge, radio, record player, floor polisher, electric toaster, lawnmower, among other home appliances, and regularly take a vacation with the whole family?



And why did only a few achieve this feat, while the silent majority, the blue-collar workers, were employed in simple occupations, with worse pay, without access to the benefits of white-collar workers? What was the size, then, of social mobility, the privileged class who "rose in life", presented and disseminated by the American media of the time in newspapers, magazines, movies, books and marketing, in relation to all else?



The question emerged in the wake of concerns about the profile of income distribution in the U.S., which was scarred by the Great Depression, dragging on for years[3]. Other factors worsened the scenario of inequality, such as massive urbanization resulting from agricultural mechanization, on one hand, and expectations of better living and working conditions in cities, on the other hand, as well as the inability of urban centers to provide occupations and jobs for all.



In fact, social mobility drew the attention of social scientists, as opposed to the profile of income distribution. Orthodox and conservative researchers tried to minimize the visible signs of social inequality by indicating that, despite these adverse conditions, many Americans managed to climb up the social ladder by means of education, work and professional performance.



On the other hand, the more left-wing heterodox did admit that many Americans were able to improve their working, income and living conditions, but the majority was still stuck to the limited job openings and low-skilled jobs of the occupational structure that prevailed in the market[4].



In fact, it was more than a matter of perspective, of how to look at social reality. Conservatives began to highlight those who improved their lives, while the heterodox diagnosed the weight of those who were unable to move from the position they had achieved, having to endure worse working and living conditions. The former sought to defend the social and economic status quo; the latter questioned the system’s foundations and conditions.



In Brazil, studies on income distribution began to emerge in the late 1960s, when the first results of the 1960 Census were released by the Brazilian Geography and Statistics Institute (IBGE). The debate that followed was intense and, as was to be expected, full of ideological hues. The orthodox on one side and the heterodox on the other; the former in one way or another closer to American sociology, the latter, in opposition, following more leftiststructuralist&nbsp;streams, notably Latin American.



There was no marked distinction between the income distribution and social mobility approaches discussed in the American and European academies and what came to predominate in Brazil. First led by the orthodox, the core question was to show that, although income inequality had been diagnosed in the census data, an internal movement in the market structure allowed workers to climb the social ladder. According to them, social mobility was the highlight, or the most important fact, despite the uneven distributional profile.



In other words, even in an unequal society it was possible to discover groups that were able to move up in the structure of the labor market. Accompanied by proper investigation instruments, such as time analysis based on the economic and social situations of parents and children, and compared at certain time intervals, the social status conditions of both were measured through statistics composed mostly by education, occupation and income data.



The results found in some studies confirmed that portions of the groups were, in fact, able to improve their educational level, occupation hierarchy and income level[5]. The orthodox discourse could be summarized as follows: the income situation is not good, but there are concrete chances of improvement. While most are poorly located in the income pyramid, they continued and justified, there are occupational groups that have better income levels (wages for employees and payments for self-employed service providers).



Brazil's growing economy in the 1970s brought economic expansion to industries, and with it the creation of new jobs and expansion of income brackets and levels as concrete signs of improvement. These jobs were occupied not only by those who had just entered the job market, but also by those who were already there and were able to adapt in terms of educational and work experience, improving their performance and, consequently, their productivity.



These would be important or even innovative claims if they were not well-known and commonplace. As in any capitalist market situation there are no possibilities of work or employment for everyone, and there are those who can achieve better conditions than others. And in an economic framework defined and conditioned by the market itself, the chances of improving employment and income exist if the economy is expanding, albeit within certain limits. Otherwise, if the economy is moving at a slow pace, the chances decrease.



In fact, after all, it is the market that defines the structure of incomes and occupational hierarchy, at least for most workers, who are employees – in Brazil, somewhere around three quarters of the economically active population (EAP). Of every four workers who find a position in the labor market, three are employed. For the self-employed and employers, the determinants are usually different, although wage levels paid to employees in certain occupations or functions “regulate”, or serve as a reference[6]&nbsp;for payment of services provided by the self-employed.



The debate between orthodox and heterodox researchers went on for many years, persisting until today, but at a more infrequent and less fierce pace. Neither side is convinced of the arguments given by the opposing group. Each remained with their theoretical convictions, arguments and statistics.



2-Tabular View of income inequality



Our methodological position on the issue targeted by the orthodox versus heterodox debate differed from that of both groups. Not that we denied income inequality or social mobility. We simply realized that one dimension was related to the other. One necessarily influenced the other, conferring distinct contours to both.



Although we found in the papers implicit considerations of the authors on the interdependence of the two dimensions, income inequality and social mobility, we were unable to verify the interest or intention to question the role of each of them in shaping the final appropriation of income. The two dimensions were always addressed and measured separately and the results, when study objects, were always contrasted with one another.



Our original idea, when we took a closer look at the work and arguments of both groups, was to try to achieve a methodology that would address the two dimensions at the same time, so as to distinguish the effects of one and the other in relation to the whole of economic and social transformations or, specifically, to the movement of income distributions.



In so doing, precisely due to considering the relationship between the two dimensions present and active, we would be able to determine whether the final framework of income distribution in a given period of time was more affected by movements in income inequality or in social mobility.



The initial idea turned into a working hypothesis, developed and presented in a doctoral thesis to the Institute of Economics at UNICAMP[7]. On the occasion, since there was no specific methodology, the disaggregation enabled by the&nbsp;Theil&nbsp;index[8]&nbsp;was used to review income distributions in Brazil in 1960, 1970 and 1980. The results were enlightening, but not definitive, because there was a methodological difficulty posed by the interdependence between two of the three disaggregated factors of the&nbsp;Theil&nbsp;index which interfered with the evaluation[9].



Nevertheless, the application of the&nbsp;Theil&nbsp;index allowed us to observe that it made sense to implement the idea and separate the income and frequency effects in measuring income inequality. The former measures the effect of changes in the income scales in the period t to t-1, and the latter measures the effect of changes in frequencies in the same period.



Thus, it would be possible to verify what income inequality could cause among individuals, on the one hand, and what "social mobility" could influence, on the other. The two dimensions, in turn, could be highlighted in the same analysis and the participation of each one could be investigated.



The idea, then, served to show that it was possible to compare the two dimensions of income distribution, even though one is numeric (frequency) and the other is a monetary attribute (income), provided that the dimensions were adequately prepared. Hence it is possible to break down the income inequality of a distribution into two components, the income effect, or scaling, and the frequency effect, or cluster (the latter being an approximation of the "social mobility” concept).



Visualizing the idea is simple and straightforward. Given two distributions in the period t to t-1, in tabular form, with a column of increasing or decreasing income brackets and another column of absolute or relative frequencies corresponding to the income brackets, one can deduce from them three occurrences: one, the invariance of the income brackets (ranges) and their frequencies; two, the income brackets (ranges) vary, but not the frequencies, and three, the frequencies vary, but not the brackets (ranges).



Therefore, the visualization of the idea[10]&nbsp;results in two types of evaluation of the interpretation of income inequality, to be presented below, as well as its respective inequality measure. The first, already mentioned, is to separate inequality into two main components, income and frequency effects; the second is to compare the frequency effect, calculated in distributions of t and t-1, to find the frequency movements (associated with their incomes), and whether they are invariant, ascending or descending.



In order to maintain analytical caution and rigor compared to the classical methods of sociology on social mobility, it is not referred to here as similar to the movement observed in the frequency effects at two different times. The two dimensions are not the same thing. At most, the frequency effect will be treated as "mobility" in quotation marks, but always and only referring to the movement of individuals, or the movement of frequencies in the scale of income distributions from t-1 to t.



The comparison of the frequency effect in two income distributions of the same universe or sample, at different periods, allows one to evaluate whether, for the entire referenced population, there was invariant, ascending or descending movement of the recipients in the scales of their incomes. In other words, one can learn whether there was "mobility" of individuals, if it was invariable, ascending or descending, through the income scales in t-1 and t, and of what kind.



Thus, the proposed income inequality measure presented in the text cited in footnote 7 and applied in this text - see sections 5 and 6 below - allows one to evaluate the final inequality, the participation of each of its three components (income, frequency and interaction) and verify the movement of frequencies over time. This movement from t-1 to t will show whether individuals are ascending, descending or remaining in the same place on the scale of market incomes and, by extension, of society.



In fact, a snapshot is taken of the situation of inequality, the income scale and the grouping of individuals on the income scale in t-1, and another similar snapshot is taken in t; the comparison allows one to see the movement of frequencies. From this perspective, then, the movement or "mobility" of frequencies (individuals) in the social scale of incomes is the dimension that depends on inequality. The greater the mobility, with little variation of the reference income scale, the lower the income inequality.



The view of this proposal differs from that of conventional analyses of social mobility in that here it works with the entire population, while the others take selected groups. Here, one can, in fact, speak of the movement of the entire active population in the labor market, but other analyses only consider groups, between or within generations[11], that are active in the labor market. In general, they are composed of small selected samples, compared to the active population.



An additional important distinction between the two visions of mobility has to do with their respective approaches. In the conventional classical view, social mobility is interpreted as the movement of individuals, observed in time, in the social scale, which can be approximated by measuring a systemic composite (social position index) between occupation, education and income. In the view presented here, the "mobility" of individuals is measured only and exclusively by variations in incomes earned in the labor market, in connection with their respective occupations.



The systemic composite in conventional analysis, represented by a status or social position index, takes into account the importance of education level, hierarchical level of the occupation and amount of income of individuals. The three components of the index are interdependent, mutually reinforcing and influence the final outcome with their weight, depending, of course, on the circumstances present in society at the time of data collection. Thecurrentness&nbsp;(importance) of occupations, educational preference and valuation of the income scales may vary.



It is clear that the social status index was designed to represent as closely as possible the social weight of occupations, education and income, as these dimensions are considered important for labor qualification in the market. The sounder and more lasting the social conventions, supported as much as possible by technological advances, the more stable the evaluations of social mobility afforded by the status indicators.



On the other hand, the less sound and stable the social conventions and technological advances, the less representative the assessments will be. In such cases, conflicting or unconvincing results may have been influenced by changes in social conventions and/or technological advances, rather than changes in merit and/or performance of individuals in the labor market.



These changes in social conventions and technological advances most closely affect education and occupations[12]. The importance of each will depend on the prestige they enjoy in society at a given moment in time. For example, IT has risen in social status since it joined the list of fields of knowledge and still allows many workers without a college education to earn good wages in the market. Another example is how workplace automation decreased the real or relative value of the wages of bank staff, especially tellers, in relation to what they earned before and to other occupations.



There is another emblematic example we were told by a trade unionist from Belo Horizonte in the mid-1980s, when we were doing a field survey on electronic automation in the Brazilian automotive industry[13]. In a steel plant in Minas&nbsp;Gerais&nbsp;conventional machining was replaced, thus laying off a mechanical turner, who until then performed the task with a traditional machine tool. The company was modernized and purchased a computerized numerical control machine tool (CNCMT).



The mechanical turner then went on to show the movements he performed in the machining of parts so that the programmer could prepare the program to be installed in the CNCMT. After several work meetings between the two, the programmer felt ready to install the program and get the CNCMT to operate. The mechanical turner, however, warned that if this were done there was a serious risk of the experiment aborting and, worse, breaking the machine. The mechanical turner believed that the program had not captured his machining movements well enough. But the programmer insisted on putting the machine to work. Result: it broke.



The latter example illustrates at least two important and interdependent aspects. First, the tacit knowledge of the machine turner, even if not systematic, is critical not only for him to do his job well, but also to see and understand other knowledge fields, though he has no education to do so. Second, the programmer’s formal knowledge is not enough to do his job, even if he interacts with another worker on a specific task. He lacks the practical work experience, the tacit knowledge.



This observation applies to any type of occupation and specialty. The question remains: how far can experience-based knowledge go and how far can formal education go? Should not the two be developed at the same time? And evaluated in terms of performance and remuneration in a more compatible way?



Thus, with these three examples, and changes in social conventions and technological advances occurring in the market and in society all the time, pure and simple comparison of social status may be insufficient and even misleading, reflecting more or less the social achievement of individuals from one period to another in time.



The only one of the three variables that comprise the social status index, and that is little affected or not at all by changes in organizational, occupational and educational scenarios is (real) income. It is what measures the status gain of IT, the loss of status of the bank teller and the lack of appropriate monetary evaluation criteria for the mechanical turner and the programmer, and expresses whether the status of individuals rose or fell in time compared to the levels presented in the income brackets of society.



For this reason, the proposed methodology presented here is able to escape this trap. Its expression of social valuation and movement of individuals on the scale of gains is income. It may be poor in the simplification and reduction of components, but it is strong and precise in the interpretation of the "mobility" of individuals in the social scale of incomes. Ultimately, society values those who earn more and better, who have more assets, who can buy (accumulate) more and better goods and services, in whatever way and whenever they want, i.e. those who are said to be "stable" in life.



The social status index itself ends up resorting to income as the primary variable because it is easier to incorporate, assess and measure. It becomes a determining, essential and control variable in the results achieved by the index. Extending the argument from another perspective, one may ask: what would the index be if income was not incorporated? It is not being an employee with a doctorate and occupying a position in an organization that guarantees a high level of social status, because there are doctors and doctors, and what distinguishes one from another in merit and performance is the income they earn. The market generally pays more to those who produce better. Income is the sieve.



Finally, it should be added that the proposed income inequality measure presented here provides immediate elements to be used by administrations at the three levels of government to support public policy design and implementation. Unlike known measures, such as the&nbsp;Gini&nbsp;coefficient and the&nbsp;Theilindex, or variance and logarithm variance, the measure proposed here indicates in its composition the status of the income scale and the groupings of individuals in this scale at any time.



These components allow one to determine whether incomes are moving away from or closer to each other and whether individuals are more concentrated at the base or in the middle or at the top of the income pyramid. Among other actions, incentives to differentiated wage increases (the poorest with higher percentages), rearrangement of less scattered wage scales, and real&nbsp;recomposition&nbsp;higher than the minimum wage, for example, can help improve the inequality profile.



Encouraging the arrangement or reformulation of less hierarchical structures, adoption of less selective criteria for admission or promotion of employees, and appreciation of innate individual qualities (tacit knowledge) at the same level as acquired qualities (education) can have a similar impact.



3- Income distribution and education: the orthodox view in economic literature



Before moving on to the central theme of the text, supporting notes will be made below about the role played by education as a requirement for hiring applicants for the job market and/or to improve the income of workers in general. After all, this is the basic corollary that supports the analysis of social scientists who take the orthodox academic view, including advocates and followers of the Theory of Human Capital[14], one of the groups of neoclassical economics literature.



In short, the Theory of Human Capital maintains that investment in education increases an individual's skills to compete for a position in the labor market and that the resulting&nbsp;&nbsp;schooling level can ensure a better occupational position in relation to others, contributing to the individual’s social mobility. Education, therefore, not only improves an individual’s income, but also helps him achieve a suitable occupation which, in the end, becomes a basic requirement for his professional and social advancement.



Education, therefore, is the primary argument of the followers of the Theory of Human Capital, on the one hand, to justify income inequality as due to individuals’ lack of sufficient schooling and, on the other, to defend schooling at all levels to raise the income levels of all individuals and therefore reduce income inequality.



If, then, for the Theory of Human Capital, on the side of the individual, education increases his professional skills to compete for a position in the market, enabling real wage increases, on the side of the company, it helps to improve work productivity, ensuring real gains in profitability. This compensates investments in staff training/schooling and justifies continuous education through complementary courses, for those who have yet to enter the market as well as for those who are already there.



Such interpretations as those in the previous paragraph have guided some of the analyses done for Brazil in the 1970s[15]&nbsp;and still remain today in arguments and data that attempt to collect economic findings to prove the postulates of the Theory of Human Capital. A quote illustrates well the position of one of its leading representatives in the seventies,&nbsp;Langoni&nbsp;(1973), when analyzing the rise in income inequality in the country between 1970 and 1960:



"The relationship between level of education and labor remuneration is justified a priori by the theory of human capital. Investments in education result in productivity increases, whose counterpart in the market are real wage gains that constitute precisely the (private) benefits of these investments. The age variable can also be justified by the theory of human capital in that it is a good proxy for experience: it would thus capture the increased productivity associated with learning on the job; it would also reflect, due to greater access to information, the exploitation of productivity differentials that exist in the market."(p. 103).



Since the Theory of Human Capital emphasizes the role of education, whether formal, technical or professional (vocational), in an individual’s training, it not only attributes to the individual the success or failure of his performance in the process of knowledge acquisition, but also, and at the same time, removes from agents (companies, schools and other organizations) the responsibility for successful training and the chances of employment.



Along with education, an individual's age, counted as work experience, qualification and skills, leaves to him and to him alone the expectations and results of his professional performance. Thus, ultimately, income inequality is due to failure in the education achieved by individuals who do not do well in the labor market, followed by failure to make the most of age-related experience.



If the individual manages to obtain a place in the market and does well, the merit is all his for being a professional committed to work. If, on the other hand, the individual does badly, and even loses his job, it is his fault for not having enough competence to achieve and maintain his position in the market. Thus, the Theory of Human Capital preserves and exempts the market from any influence on an individual's suitability for work, while reserving and attributing to him lack of professional preparation and incompetence if he is not a good worker.



Finally, it should be noted that, on the agenda of professional education, the concept of skills,



"has the characteristic of taking into account a worker’s behavior and attitude more than the needs and requirements of the production island where he carries out his tasks. Concrete experiences in business organizations that adopt the proposal of the modern paradigm of production have given constant attention to setting up a new model or "worker profile", followed by educational reforms, which seek to incorporate the dimension of professional skills as accurately as possible in professional education" (p. 72)[16].



And,



"In fact, the adoption of skills in training the new profile of workers is part of the broader process of flexible work. Replacing the concept of qualification with that of skills not only mischaracterizes the notion of profession, as such, but also weakens the role of trade unions for workers, as representatives of professional categories (p.73)[17].



Therefore, there are no relevant alternatives to change the income distribution profile[18]. If education does not fulfill its role, nor the experience accumulated by workers, neoclassical scholars would conclude that the trend is towards a worsening of income inequality in society.



Thus, business organizations are exempt from participation in the process, leaving to workers and schools, to the former more than to the latter, the weights of their misguided actions. To the former, as already mentioned, for not having been able to assimilate and learn the skills, to the latter for not having properly taught the respective educational contents.



Even the theoretical inconsistency arising from the Theory of Human Capital harms workers and throws them out on the street. Just take the following. If, according to the Theory, it is the improvement of workers' education that reduces income inequality and, on the other hand, it is the worsening of workers' education that increases inequality, it is not the herculean effort of society and public policy to provide good education for all that will reduce inequality to the extreme.



Why? Because a point will be reached when the total number of workers with appropriate education will not find good and sufficient job openings, even if the total number of workers is only slightly above the number of jobs openings available. The market cannot absorb them. Because it is the market that always defines what it needs and not the followers of the Theory. The surplus of workers runs into the limits given by the market. The Theory of Human Capital has no answer for this situation.



In fact, the limits given by the market are the parameters that are always at work in negotiations between capital and labor. Professional education only prepares workers to have a more satisfactory entry in companies or possibly to get promoted later. Nothing more. Or rather, not yet, because professional education provided by schools is also crucial in exempting companies, in many cases, from the future costs of adjustment and adaptation of workers to their occupational structures.



4- Income distribution and the labor market: an unconventional view



Unlike the neoclassical economic literature, which maintains that education is the main factor in workers’ allocation in the occupational structure and in wage improvement, some approaches concede that, on the contrary, objective labor conditions, expressed by a range of prevailing production manifestations in society, are the main factor.



Therefore, it is not the workers’ individualities in acquired education or in age-related work experience that will determine the final income inequality profile, but rather, given the profile of production technology, the prevailing terms of the types of hiring and employment of labor. These types are referenced by and related to more systemic interpretations of the capitalist mode of production[19].



Such factors are determined objectively and concretely by the production process, not the workers’ innate and acquired individual characteristics, and directly and indirectly influence the conditions of employment and wages and their respective returns in wages and payments. For the Theory of Human Capital, the individual and the collection of individuals (labor supply) have power to establish and define forms of wages and payments. To critics, it is the market itself, differentiated in its various forms of manifestation in the economic space that wields such power.



The proposal developed here is to address the determinants of income distribution in society as coming from the labor market itself and engineered and established by it. Thus, it is aligned with the group of critics who go against the understanding of the Theory of Human Capital.



The process of determining the income distribution profile is understood based on the organization of employment and labor in the company (or business organization[20]) and in the collection of companies, whether in a region, or in their totality. The various ways in which the organization of employment and labor is present in each company and region are directly and indirectly linked to the ways in which capital, as production relation, is manifested and developed. The more traditional these forms, the less defined the organization of employment and labor; the more modern these forms, the more defined the organization.



The two most visible and prevalent forms of manifestation of labor and employment organization in any company are the wage scale and the occupational structure. The former establishes the terms of payment of the work to be performed or already performed in each type of job offered or open in the company; the latter establishes the varieties and characteristics of the set of tasks to be performed or already performed by the worker in the required or established job



The resulting forms of organization are valid, in general, for 30 out of 40 workers, since wage-earners represent approximately 75% of the economically active population (EAP) in Brazil. The other ten remaining individuals are or will be self-employed or entrepreneurs – nearly 4 entrepreneurs and 8 self-employed, according IBGE’s continuous National Household Sample Survey (PNAD) published in 2013.



Thus, adding the total of wage-earners to the total of employers, we reach almost 80% of the EAP composed of individuals who are regulated and depended on the working relations and conditions of the market. The remaining 20% of self-employed are not necessarily outside those working relations and conditions. Either because they come and go in less or more promising times of the market in terms of labor gains, serving as a kind of temporary or occasional labor reserve. Or because they charge for their services at levels more or less compatible with the hours worked by wage-earners – the working hour serving as a reference value for hours of service to be provided.



In any case, wage-earners and employers, due to their weight in the EAP, determine the validity of the wage scales and occupational structures as prevailing standards in the market of hiring and promotion of employees. Thus, it is not out of place or context to claim that all wage scales and occupational structures of all companies and regions will constitute the reference framework for employment and payment of workers.



Or that, on the whole, they will determine the final profile of the prevailing income scale and occupational structure in society. Or even the stratification of incomes and occupation.&nbsp;It follows that the scale and the structure lead to verification, evaluation and measuring of the profile of income inequality in society.



So, workers and firms are in the market to establish among themselves the conditions and standards for hiring labor. The workers, on one side, with their levels of education, work experience, acquired knowledge and other individual characteristics. Companies, on the other side, with their contractual requirements, including the wage scale, already defined and the occupational structure also established.



The workers’ conditions to bargain for better wages and occupations are limited unless some of them have exceptional qualifications that far surpass those of other applicants. Even so, their bargaining limits run into the scales and structures already established by the companies. In smaller and less organized companies, bargaining conditions are even worse because they have no capital turnover, nor enough revenue, to support payments of wages above the standards and to place workers in occupations that are better than those offered by the market.



Even in the few cases in which workers can be hired above the standards, a general movement occurs in the market so that other companies in the industry will either also support this type of contract, even opening momentary exceptions, or end up reorganizing themselves in order to open the same kind of possibility sooner or later.



The competition between companies for high-level professionals ultimately defines additional hiring standards, which become incorporated into their wage scales and occupational structures and, by correspondence, to all of them, just by changing the pre-existing stratification.



Consequently, companies already include pre-defined wage scales and occupational structures in their terms of employment, as well as some extra bargaining opportunities, outside of which there are limited chances of achieving improvements. Workers either adapt and accept these conditions or are forced to leave in search of other possibilities.



From the outset, market competition establishes somewhat homogeneous hiring standards so as to minimize and limit as much as possible any special bargaining opportunities. Thus, at the end of the day, workers either accept what they are offered by the companies, or they are unable to find a better alternative in a&nbsp;levelled&nbsp;market, or they go provide services on their own in any cracks that are left to them.



Given this, it is possible to admit with a high degree of certainty that the general and specific determinations of the income inequality profile lie within the labor market itself.&nbsp;The wage scales, from which monthly payments are made to workers, and occupational structures, from which workers’ tasks in their jobs are specified and stratified, establish and determine the variations of the pyramidal form to be taken by income distribution in society in its various sectors, regions and population densities.



The range of wage scales and occupational structures encourages a characteristic rigidity of the final income stratification. From the most traditional to the most modern companies, from the smaller to the larger companies, all of them, given their technology and production, imprint their characteristic stratifications in the market.



In the end, in society’s income distribution picture, they will not appear as such, but they will be there, together, in the final computation, in the definitions of incomes of individuals and in the groups that receive the incomes of the resulting final scale.



5- Operationalization of the tabular view of income distribution



The most simple and straightforward way to ascertain and understand income distribution is through its tabular presentation[21]. Only two columns, the first formed by ascending or descending sequential income frequencies and the second formed by absolute or relative frequencies corresponding to each one of the income intervals.



This is the appearance of the income distribution shown in the two examples below. An initial view reveals whether the frequency pattern is more or less homogeneous throughout the income intervals, or more concentrated at the base of the table or more at the top. This already gives an idea, a priori, of the size of inequality in the distribution. The frequencies record how many individuals earn an income within each income interval.



If the frequencies are more concentrated at the base, inequality is greater than if they were more concentrated at the top; between these two extremes, frequencies are scattered across income intervals without large accumulations in any of them. This allows comparing two tables, referring to two different situations in time, so that one can have an immediate sense of whether inequality is increasing or decreasing. There are formal criteria, however, for this visual assessment to be precise and accurate (see below).



The tabular form was chosen and adopted universally to facilitate the presentation of the distributions when total frequency is large, as well as those of each interval of the attribute in question (income, size of municipalities, people’s height, etc.). When distribution is shown for visualization only, the intervals are used; when, however, the measurement of the distribution’s degree of concentration is required, it is necessary to obtain the value of the average attribute of each interval.



The following examples are illustrative. The first table is formed by income intervals and the second by average incomes corresponding to each interval.



Example&nbsp;of&nbsp;tabular&nbsp;income&nbsp;&nbsp;distribution&nbsp;by&nbsp;income&nbsp;intervals


Income&nbsp;intervals

Frequencies


a – b

n1


b – c

n2


c - d

n3


Ø&nbsp;&nbsp;d

n4


Total

N





Example&nbsp;of&nbsp;tabular&nbsp;income&nbsp;distribution&nbsp;by&nbsp;average&nbsp;incomes


Income&nbsp;intervals

Frequencies


r1

n1


r2

n2


r3

n3


r4

n4


Total

N







The tabular presentation of the income distribution, therefore, indicates that, when grouped by income ranges (or intervals, or classes), precisely to be viewed, analyzed or for performing the appropriate calculations, the survey carried out in a given population matched it with each individual’s respective incomes (annual, monthly, weekly averages).



The end result, therefore, is the count of individuals (frequencies), with their respective average incomes grouped by ranges. In fact, the table’s two columns show two series: the first of average incomes or income ranges and the second of frequencies or individuals. Each of them, in the case of income, have distinct movements, determined by the labor market’s conditioning factors.



The table in general is always understood as the picture resulting from counting the frequencies arranged by ranges of the attributes. It is the same for income distribution.&nbsp;It so happens that there is an additional possibility to view and understand such a table, as follows.



As the income ranges or average incomes of each range are arranged in either increasing or decreasing order, this feature can be used to also understand the table of income distribution as ordering or a position scale, and even as a scale of prestige or social merit.&nbsp;The incomes of each individual grant them the places they occupy in the position, prestige or social scale. Individuals with lower incomes are at the bottom of the social position scale, while the others are above and at the top of the scale.



Thus, in the income series,&nbsp;rn&nbsp;&gt; rn-1&nbsp;indicates that the group of individuals n is located in a better situation in terms of income than the group of individuals n-1. The n group therefore has a better position (whatever it is) than the n-1 group.



The income distribution table therefore presents two distinct types of features. One is the counting of frequencies for each group of individuals matched to each income range. The second is the ordering or scale of the individuals, positioned according to the levels of income they earn.



It is this additional feature of ordering or scale of the income distribution table that, along with the other usual feature, sustains and distinguishes the interpretation of the income inequality measurement, which will be presented below.



6- Income and frequency series and income inequality



The first step in advancing the proposal for measuring inequality is to remember that there are two series[22]&nbsp;in the distribution: one of incomes (attribute), the other of frequencies. The income series is formed by the set of incomes earned in the various economic activities by wage-earners, employers and self-employed workers. The frequency series is formed by the set of individuals who perform activities in their respective occupations (wage-earners), functions (employers) and provision of services (self-employed).



The different movements of the two series over time, from one period to another, are related to changes in income gains in the income series, which distinguish the groups of individuals, and to changes in the occupations, functions and services in the frequency series, which regroup the individuals in the income intervals.



The second step is to remember that the income distribution table can be viewed and understood as a count of the frequencies in their respective income ranges and as a position scale in the distribution, referenced by the income levels of each range. These two features of the table are important to show the movements of incomes and frequencies from t-1 to t.



The third step is to include the two series in an income inequality measure, in which each can be adapted and delimited separately. Adapted in the sense of converted to a mathematical dimension compatible not only in its numerical expression, but also in the precise characterization of its contents. Delimited in the sense of having its numerical magnitude determined, each different from each other.



In order for the income and frequency series to be adapted, therefore, their initial expressions (values and numbers) are converted to comparable magnitudes. This is done because incomes are originally measured in monetary units and frequencies are presented in different numerical quantification.



The chosen form of conversion, which should be compatible with the desired comparable magnitudes, is intended to obtain incomes and frequencies in relative values, i.e. participations. So the participations of each average income&nbsp;(yi)&nbsp;are obtained, referring to each income range&nbsp;(ri)&nbsp;in the total income distribution, and the participations of each frequency group in the total sum (N) of the frequencies or relative frequencies&nbsp;(ni).



In fact, the conversion does not alter the series of absolute average incomes, representative of the income intervals (or ranges, or classes) nor the frequency series, it only adjusts the dimensions of the series to make them comparable percentagewise. Thus (ri) is the multiplication of two terms(yi∕Y), where&nbsp;yi&nbsp;is the average income of the&nbsp;i&nbsp;interval and Y is the average income of the entire distribution, and&nbsp;(ni∕N)&nbsp;is the relative frequency corresponding to average income&nbsp;yi.



The only series, in fact, whose form is altered is that of incomes. However, it continues to indicate its characteristic of ordering or scaling of the relative frequencies around the relative incomes&nbsp;(yi∕Y).&nbsp;Variations in relative incomes take relative frequencies up or down the income ladder, which is an approximation of the position ladder.



With the conversion of incomes and frequencies into comparable magnitudes, the following algorithm is obtained:



(1) Σ (ri&nbsp;–&nbsp;ni)2&nbsp;= Σ (ri)2&nbsp;+ Σ (ni)2&nbsp;- 2Σ(ri)(ni)



If&nbsp;ri&nbsp;=&nbsp;ni&nbsp;for every&nbsp;i, the expression equals zero, which means that all the&nbsp;i&nbsp;groups of the distribution earn the same income. In the extreme case, when only one individual earns all the income of the distribution, while the remaining N-1 do not earn anything, the expression comes closer to 2, the higher the N, or 2 [(N-1)/N]2.



Standardizing the limits of the expression so that it varies between zero and one, there are three alternatives. First, dividing expression (1) by Σ&nbsp;(ri&nbsp;+ni)2; second, dividing expression (1) by the above expression, but obtaining the square root of the result; and third, dividing expression (1) by its first two components&nbsp;Σ (ri)2&nbsp;+ Σ (ni)2.



The approach used in this text is the third, whose P expression is



(2) P = Σ (ri&nbsp;–&nbsp;ni)2&nbsp;∕ [Σ (ri)2&nbsp;+ Σ (ni)2] , onde 0 ≥ P &lt; 1[23]

When P reaches zero, the maximum income equality is reached, where all individuals earn the same amount of income; when P approaches 1, the state of maximum income inequality is reached, where only one individual earns all the income of the distribution.



The numerator of the P expression in (2), when unfolded (1), shows the first portion&nbsp;∑(ri)2, which measures the&nbsp;income effect&nbsp;or&nbsp;scaling&nbsp;(IE); the second portion&nbsp;&nbsp;∑(ni)2&nbsp;measures the&nbsp;frequency effect&nbsp;or&nbsp;grouping&nbsp;(FE) and the third portion&nbsp;-2∑rini&nbsp;measures the combined effect of the&nbsp;previous effects&nbsp;(I) or&nbsp;interaction.



According to the unfolding of the numerator of expressions (1) and (2), as P approaches zero, in the neighborhood of maximum income equality, the sum of&nbsp;∑(ri)2&nbsp;+ ∑(ni)2, income and frequency effects becomes equal to the sum of&nbsp;-2∑rini, the interaction component. In the constitution of P, therefore, the interaction effect represents the share that absorbs joint variations of relative incomes and frequencies that, contrary to the separate effects of income and frequency squared, represent movements that lead to a lower inequality level of the distribution.



In fact, from t-1 to t, while the separate variations of the effects of the sum of&nbsp;∑(ri)2&nbsp;+ ∑(ni)2&nbsp;&nbsp;record inequality fluctuations in P, joint variations in the relative participations of income and frequencies record fluctuations contrary to inequality in P. What happens is that the interaction effect absorbs the joint variations in incomes and frequencies contrary to those of the separate effects of income and frequency according to the logic of the developed algorithm.



The income and frequency effects, in turn, become closer in magnitude, in absolute and percentage terms, the closer P gets to its extremes, zero and one, and become equal at the extremes. Thus, when P = 0, IE = FE =&nbsp;∑(ni)2; when P ≈ 1, IR = FE = 1/2. Among these, however, the effects differ according to the configuration of their respective series.



The more dispersed relative incomes are, the greater the income effect, and vice versa. The more concentrated the frequencies at the base or top of the distribution, the greater the frequency effect. On the other hand, are more evenly distributed the frequencies throughout the income intervals, the smaller the magnitudes affected by the frequency effect. Thus, out of the combinations of variations in income and frequency effects, or their movements from t-1 to t, the P measure will indicate the specific weights of the effects and the size reached by income inequality.



6.1- Distribution of income in Brazil and income and frequency movements



6.1.1 Initial Considerations



The research underlying this text aimed to analyze the evolution of income distribution in Brazil from 1960 to 2010, and throughout the intermediate decades. In fact, the proposal was to review this evolution before applying the methodology developed previously[24]&nbsp;and reproduced here, in particular, highlighting distributions by educational levels.



Measurements of inequality and income and frequency effects would be verified to see how changes in income ranges and frequency movements evolved respectively along income distributions in the long period of 50 years. Likewise, the aim was to identify and, if possible, measure the effects that education may or may not have caused on inequality. Moreover, a qualitative assessment of census data would be carried out.



The Research Board of the Brazilian Institute of Geography and Statistics (IBGE) informed that it would not be possible to obtain all the desired information. It forwarded instructions, recommendations and a few limitations though. These guidelines, although opportune, thwarted the aim of the research to review the 50-year period according to its original purpose.



The decision was made to use the information available at the time and draw from it as much information as possible to answer the research questions. Accordingly, the next sections will present the sources and information used and list and indicate the results found by applying the methodology.



6.1.2- Sources and information used



This research project drew from two basic sources, both from IBGE: demographic censuses and national household sample surveys (PNAD). For 1960, 1970 and 1980, information on individual earnings of persons aged 10 years and older were recovered from the author’s doctoral thesis[25]. For 2000 and 2010[26], the references were the respective demographic censuses.



For 2000 and 2010, the respective personal income distributions were obtained directly from IBGE’s online database, with table 1.7.8 for 2000 and table 1.2.1 for 2010, Thus, with data from the three previous decades (1960, 1970 and 1980), it was possible to verify the trend of inequality and income and frequency movements in the half century covered by this research.



For the first decade of 2000, the sources of information were the 2001 to 2011 PNAD. In these cases, the surveys included in the research were for individuals, families and households. The surveys presented income intervals, as well as respective average incomes, already calculated, which allowed the income shares of each frequency group to be obtained in order to perform the measurement of inequality measure P.



6.1.3- A questionnaire on education



As mentioned previously, the adherents of the Theory of Human Capital, whether followers or not, attach to education a prominent role in determining either the worsening or the improvement of the income inequality profile. The lack of official data from IBGE to assess this hypothesis, however, partly hampered this research objective. The methodological changes made by Institute prevented education and income comparisons between the years.



Since the P inequality measure has a component that measures variations of groups of individuals (frequency) from t-1 to t, the original idea was to use it for education groups and verify whether education, in fact, influenced the movements or "mobility" of individuals in the market’s income range, and how.



On the other hand, a questionnaire prepared to qualitatively verify the importance of education in the hiring of applicants and promotion of those already occupied in the market was sent to a number of human resource professionals to be answered. Since the questionnaire was going to be sent out anyway to complement the evaluation of the role of education, it ended up strongly supporting the proposed objective, in the absence of quantitative information from IBGE[27].



The questions included in the questionnaire were open so as to leave respondents free to include comments they deemed important and well founded. Twelve (12) professionals in the field of human resources were selected.



Of the total, only 6 (six) agreed to answer the questionnaire and did not want to be named, either because they are directly linked to the companies, or are working in agencies that hire applicants as a service provided to other companies. The questionnaires were first sent out on June 23, 2013.



It was possible to draw some conclusions and comments from the questionnaire responses that help understand what the education market is saying, as opposed to what academia insists on claiming. However, the evaluation of the questionnaire will be carried out after the evaluation of the income distributions.



The questionnaire sent to the selected human resources professionals on June 23, 2013, is transcribed in Report handed in the Center for Public Policy Studies (NEPP).



6.1.4- Analysis of income distributions of the Censuses (1960-2010)



The following data refer to income distributions in Brazil in 1960, 1970, 1980, 2000 and 2010 All were obtained from the demographic censuses (IBGE). The first three came from&nbsp;Peliano&nbsp;(1992) and the last two from tables 1.7.8, 2000,&nbsp;People aged 10 years or older, employed during the reference week, with work income, value of monthly average nominal income...&nbsp;&nbsp;and 1.2.1, 2010,&nbsp;People aged 10 years or older and value of average nominal income ... by activity status in the reference week&nbsp;... Incomes and frequencies of the economically active population (EAP) were obtained from all five distributions.



There is statistical correspondence between the intervals of current income of the first three distributions (1960, 1970 and 1980) and the intervals of multiples of the minimum wage in the last two (2000 and 2010). There were no changes in the intervals of income brackets, only estimates of the respective average incomes by regressions.



The evolution of the P inequality measure, through the trend of its magnitudes, matches that of the&nbsp;Gini&nbsp;coefficient taken as a reference, both by the estimates made in this study and the estimates of the&nbsp;Getúlio&nbsp;Vargas Foundation (FGV) with information from the Censuses and the PNAD from the IPEA database.



A third correspondence lies in the actual construction of the P inequality measure. Since this is an average of the calculations made for each average income and frequency of each income interval, the discrepancies caused by differences in estimates, either in size or in extremes of income of the intervals for the first three years of the distribution series, when regressions were performed, were either offset or reduced, without ruining the results.



A final methodological comment on the estimates of inequality measures used,&nbsp;Gini,&nbsp;Theil&nbsp;and P. Our estimates usually have different magnitudes from those of FGV/IPEA, included below for comparison of trends. It is possible and quite likely that this is due to the form of the information used. This research used the information published by IBGE on its website.



On the other hand, FGV and IPEA use a database with more information, including individual information. Thus, the calculations of the measures may differ due to the provision of information by size and amount of income intervals. The source of the information also differs, either from samples or the entire survey.



Data for income brackets and respective average incomes, as published by the IBGE, were used in this work. Thus, the respective calculations of theGini&nbsp;coefficient, calculated and published, were made also taking into account the fractions of inequality within each income bracket, which this study, or any other that uses only data published by the censuses, does not have access to. For this reason, estimates of income inequality made here differ from those made by IBGE.



There were also methodological adjustments to the IBGE surveys. One of the striking differences was the change in reference periods used. Until 1991, the period used to capture occupied people was 12 months (from September 1 of the year preceding the Census until August 31 of the Census year). In 2000 and 2010, the period to capture occupied person was changed to the last full week of July. This change, in itself, is reflected in the captured work income.



For income distributions, however, which are calculated for the entire working population, these changes should be diluted due to the huge amount of information, according to the Law of Large Numbers, and will have little influence on any discrepancies caused. Thus, the larger the amount of aggregated information, the lower the possibility of significant differences between magnitudes, values and data estimates.



In the case of P, however, the magnitudes of its results matters less than the trends shown by them over time, which relate to variations in movements that occur on the income scales and occupational structures. Not that the magnitudes have no validity, after all they are part of the measurement, but, given the methodological considerations made above, the evolution and swaying of the magnitudes end up having greater analytical relevance here.



Table 1

Income&nbsp;distributions&nbsp;of&nbsp;the&nbsp;&nbsp;economically&nbsp;paid&nbsp;active&nbsp;population

Brazil: 1960, 1970, 1980, 2000 e 2010


1960

1970

1980

2000

2010


Income*

Freq.**

Income*

Freq.**

Income*

Freq.**

Income*

Freq.**

Income*

Freq.**



1,185


2,665


3,872


5,217


7,833


14,38


32,34


114,5







4542


2891


2224


2868


3153


1738


592


121







56,5


123,9


174,4


224,6


309,5


613,2


1416


5470






9339


3770


4351


1318


3155


2856


660


296






2216


5123


7212


10226


16203


29709


59295


225071







14295


7857


4118


4823


4199


2532


1079


439







47,23


132,0


242,2


385


576,9


1064


2243


6766







3593


11731


16708


8268


8377


7274


3037


1629







150,2


464,7


778,5


1315


2030


3667


7361


22162






7568


20446


29206


9949


7859


5843


2200


1089






6,58&nbsp;a

18129&nbsp;b

284,8&nbsp;a

25745&nbsp;b

11616&nbsp;a

39342&nbsp;b

649,2&nbsp;a

60617&nbsp;b

1475&nbsp;a

84160&nbsp;b



Source: IBGE; *Current&nbsp;values&nbsp;**Thousands; a –&nbsp;average&nbsp;incomes, nominal&nbsp;values; b- total&nbsp;frequencies.

Table&nbsp;2

P index&nbsp;and&nbsp;income,&nbsp;frequency&nbsp;and&nbsp;interaction&nbsp;effects&nbsp;and&nbsp;Gini&nbsp;Coefficient

Brazil: 1960, 1970, 1980, 2000 e 2010


Measures

1960

1970

1980

2000

2010


Income&nbsp;effect

0,153

0,161

0,144

0,181

0,152


Frequency&nbsp;effect

0,169

0,212

0,214

0,172

0,216


Interaction&nbsp;effect

0,225

0,207

0,191

0,208

0,251


P

0,30

0,45

0,47

0,41

0,32


Gini&nbsp;a

0,41

0,49

0,49

0,53

0,43


Ginib

0,53

0,58

0,58

0,59

0,53


Theil&nbsp;a

0,58

0,82

0,84

0,75

0,70



Source:&nbsp;previous&nbsp;table; a –&nbsp;own&nbsp;estimates; b- FGV (Fundação Getúlio Vargas)&nbsp;estimates&nbsp;using&nbsp;IPEA data.



The results in Table 2 immediately indicate that the measurement of income inequality made by P closely follows the trend captured by the&nbsp;Theil&nbsp;index, but not so much by the estimates of the&nbsp;Gini&nbsp;index. The most discrepant period between P and&nbsp;Gini&nbsp;is from 1980 to 2000 (in the latter year methodological modifications occurred), when the variations in both take different directions. But not so with the&nbsp;Gini&nbsp;estimates made in this study and those of FGV/IPEA that show a similar trend.



The explanation for the difference between P and&nbsp;Gini&nbsp;in the years mentioned may be related to the respective measuring formulas. While in P the dimension is quadratic, in&nbsp;Gini&nbsp;it is linear. Apart from the differences in dimensions, the variations captured by P tend not to resemble those captured by&nbsp;Gini, but tend to approach those captured by&nbsp;Theil, whose dimension is log-normal.



Regarding the effects of P, it is observed that, over the 50 years, the grouping of individuals, or the frequency effect, maintains an uptrend, except for the reversal in 2000[28]. The scaling-up of incomes, or the income effect, maintains a sinuous trend but almost stabilizes around a central level, except for 2000, when it rises atypically. Taking just the two ends of the period, however, the grouping (clustering) moves upward, while the scaling-up shows a stationary trend.



In turn, the interaction effect, due to the very concept of P, is like the regulator of equality movements in the distribution. When P rises, it tends to match the smaller magnitude; when P is reduced, it tends to follow it with greater magnitude. This inverse relationship between P and IE is the thermometer of the inequality increase and decrease movements.



Going beyond the pure and simple observation of the data of Table 2, it is important to ascertain what these movements indicate regarding the compared income distributions. What could be behind these figures and P indicators? What is happening in the income distribution and occupation structure in the country’s labor market?



The evolution of the frequency effect indicates that it has been the main component in shaping income inequality in Brazil. Its participation in P exceeds the income effect in virtually the entire period, except in 2000, when the two were almost equal.



This means that income inequality in the country is due more to the pressure of workers at the distribution’s base, or its vicinity, looking for jobs, in the case of wage-earners. Or looking for work in the case of self-employed workers (freelancers), either for better placement in the companies where they are employed, or in the market, where they provide their services. Or in search of new business opportunities, in smaller numbers, in the case of small business employers.



This pressure is due not only to those who seek employment or work the first time, the newcomers, but also to all others who attempt to engage in other occupations in companies higher up in the structure of occupations. Added to them are those who stopped working for a while due to illness or personal or family problems, but have returned to the market, and want to return in a better situation. The professional ladder is there; one needs to know the steps to climb it with advantages and benefits.



The big problem is that the professional ladder has limited and narrow steps. Not everyone fits on them. Even if more steps are built, the ladder increases in height and stratification follows accordingly, unlike what is preached by all those who attribute to workers’ formal education and skills the leveling of knowledge needed to improve gains in the labor market. For them, it suffices to attend to basic, secondary and higher education and/or seek professional qualification to get good jobs and wages.



Many are left out in the quest for positions, including, in general, those with higher occupational and wage returns. Most applicants do not end up having access to higher steps of the professional ladder, and survive in low paid jobs and work requiring little or no qualifications. They remain there for a long time waiting for better opportunities.



It is not individual attributes, including educational and professional, that make a difference for workers in general. For a minority, yes, it works, especially in more modern sectors and occupations, typical of advanced technologies. Those who reach the top or stand out are the most fortunate. However, what goes for the remaining workers, the silent majority, is the hierarchical combination of previously designed levels of occupations and associated levels of remuneration in the structure of business organizations.



This is the picture of the labor market in Brazil with respect to the income distribution among individuals. The same can be observed among families and households[29]. Formal and professional education serves for many jobs and work, but not for everyone, as necessary conditions for hiring and promotion.



Indeed, it is necessary for workers to be able to read, write and understand what they read, and to know how to operate and monitor equipment and machines and perform their operational tasks. However, the two types of education are not sufficient conditions. The market decides what is sufficient. It determines the differences in income and occupation through the prevailing wage scales and occupational structures in business organizations.



6.1.5 Education and income: information, comments and data



The role of education in improving the lives and work of individuals and families is, no doubt, unchallenged. Knowledge in general is necessary to understand the world around us, get along with others, point at and open up paths. But knowledge and specific know-how oriented to professional practice, whether in Academia or in unskilled jobs, or in providing freelance services, is different.



Regarding the dichotomy between school and work, what schools should teach, to whom, and what work requires, a lot has already been written[30]. What do human resources professionals have to say about the dichotomy? They deal directly with the intermediation between job and work seekers and companies. They know exactly what applicants are seeking and what job openings in companies require. Hence it makes sense to resort to them to learn a little more about the school and work dichotomy.



Section 6.1.3 above referred to the questionnaire sent to human resources professionals with questions that sought to capture the role played by formal and professional education in the hiring and promotion of workers by companies. The questionnaire was also aimed at learning more about the type of workers’ skills companies want and how companies establish workers’ wages.



Below, a comprehensive summary of the questions in the questionnaire is presented. Each response was summarized, numbered and marked in italics, except those that dealt with the same subject from related perspectives, which were grouped around one of them, and following that, comments made by this text are presented.



1. For human resource professionals,&nbsp;companies generally want to hire people who have "skills" related to the profiles of positions and to the growth potential of each applicant.



Skills[31]&nbsp;to perform the tasks, and only them, and at most tasks directly related to the job. From skills, therefore, emerge flexibility and versatility. But broad flexibility and managed and restricted versatility. Workers do not need to think what to do, just follow guidelines pre-established by companies and do what they are told; if something goes wrong, they have instructions to perform commands and additional tasks to correct the problem. Period.



Skills took the place of workers' qualifications. The companies are not interested in hiring someone who thinks, understands, reflects and decides. They just want someone who understands, memorizes, operates and obeys. The worker begins to serve the machine or the system of machines, as a functional, necessary, essential piece, albeit additional and complementary.



2. For unskilled positions,&nbsp;in general, the applicant needs to have professional experience (related or unrelated to the post applied for), to be able to read, write and speak, and have specific skills.&nbsp;For average skilled positions, in general, the applicant must indicate his/her specific professional experience and required education.&nbsp;For highly skilled positions,&nbsp;the main information required is whether the candidate has the required training, what is his/her professional experience and list of skills. In all three cases, especially in the last two, the applicant’s growth potential in the company is also assessed.



A condition imposed on unskilled and average-skilled workers some years ago, which apparently still exists, was observed in the transition from mechanical technology to electro-electronics[32]&nbsp;in automobile manufacturing. Applicants for the positions of mechanic and assistant mechanic was required to be able to read and write, and to "understand" the manuals that specified the new technology. Difficulties reported by car garages were all related to the fact that the applicants found it hard to understand not only the new descriptions of electro-electronic parts and pieces of the new engines, but also, and mainly, the text itself.



Professional experience, skill and training. The three main requirements for hiring. For highly-skilled positions, applicant’s growth potential in the company is also assessed - because the investment is greater. Thus, education is only part of the hiring process. It is not the most important condition, even for highly-skilled applicants. What weighs more, at the end of the day, is experience and skills, or what the applicant has already done, knows and can do. Education serves as a credential for applying to the position; a necessary condition, but not sufficient.



It is even possible that education, experience and skill, the ritual trio of passage into the company, are and serve as mutual checking requirements. That is, the applicant who claims to have training must demonstrate it through experience and acquired skill. Or vice versa. Each of the three dimensions actually works to control the others. For example, if the applicant has appropriate training, but poor experience and skill, it is a sign that he did not do well in the training; or, if the applicant has great experience and skill, is a sign that he surpassed, in practice and in time, his training.



3. There is an additional issue that also matters greatly in hiring.&nbsp;Among several applicants with similar levels of training for the position (education, experience and skill), preference is given to those who show interest, initiative, and are flexible in performing the work, in addition to demonstrating character, responsibility and values.



The applicant must therefore fully meet the company’s technical and personal requirements. In other words, the applicant should and has to work for the good progress and advancement of the company’s production process. If he wants to move up to a higher position, he has to play on the company’s team. Ultimately, he essentially has to play the role of a true "human machine" in the system of machines in operation.



And this is the crucial condition for the worker, when playing on the company’s team, to begin to be connected to the production technology, not only being familiar with it, but understanding it and knowing how to operate it. If later the worker is discharged and the production technology changes, his chances of being rehired are quite slim. This is the virus and stigma of so-called technological unemployment.



4. To be promoted in the company,&nbsp;an employee must show performance and growth potential; what counts in these cases are the results of the work that is performed and the employee’s commitment to the company.



Career advancement within the company only intensifies and narrows the hiring criteria. An employee will only improve his salary and/or occupational position if, and only if, he demonstrates convincing results in his work and continues to be committed to the company, seeking to produce more and better.



5. For companies, in general,&nbsp;the educational training required for hiring is related to general schooling and additional specific knowledge (languages, IT, etc.). Large organizations have training options that qualify staff better than conventional courses outside companies.



For professionals in human resources, education, from the perspective of companies, serves only as a credential for hiring an applicant. What will decide in favor of the applicant, i.e. the appropriate training for the job, is specific knowledge acquired. And in these cases, large companies are interested and able to prepare their staff better. After all, the companies themselves know what "education" or workers’ training is best for them.



In general, companies value the kind of education that is given at school, but prefer and emphasize applicants who "know how". There is a difference between what the applicant learned in school and what he incorporated in his knowledge, so what matters is what he knows how to do. Moreover, in some cases, companies hire workers just because they know that they came from such and such formal, professional or technical school, or college - recognized as having the appropriate educational standard.



6.&nbsp;The wage scales and positions are defined jointly by the companies. In general, the wage scale is defined first, then the positions of the occupational structure are allocated in the wage scale. The differences in levels are distributed in the wage scale according to the establishment of skills, responsibilities and conduct assigned to each position. And the wage increase from one level to the next is also compared in general with what the market pays.



Therefore, the wage income distribution comes first, then the designation of the characteristics and requirements of the work to be performed in each occupation. In fact, it is as if the company designed a business or investment project. It establishes project costs, then calculates profitability. Since the payment of the workforce is classified as a variable cost in accounting, it is established first.



Thus, the only two alternatives to this situation for the applicant to achieve better conditions to negotiate his contract with the company, is when the job’s wage is compared to what the market is willing to pay, or when there is a declared shortage of this particular professional in the market, provided he has work experience and recognized professional skill. The company, then, in order not to lose the applicant to a competitor, more than securing him in their production or administration, is forced to improve the wage level. These are the only cases in which this solution can become a reality.



Of the human resources professionals who responded, it is worth noting some important points. All of them agreed in terms of what a worker should represent in order to be hired by a company. A summary of these points is presented below.



The three basic requirements for a company to hire an applicant are work experience, professional skills and schooling level (training). If there is more than one applicant who meets these requirements, the decisive factors are of a personal nature (potential, commitment, responsibility, initiative, etc.).



For work experience, "know-how" is what matters. No matter what the worker learned in school, what counts is what he knows how to do and can put into practice. It is not the knowledge learned that matters, but knowledge retained, so that the work can be performed better.



Professional competence specializes the knowledge acquired by workers hired by a company. The company’s only interest is that workers perform, and well, the pre-established requirements of their occupations, nothing more. These requirements incline workers in modern production towards flexibility in performing the work, which is an adapted and modular form of versatility.



Flexibility requires workers to do what their job requires, but also, if necessary, replace another worker in a related occupation, at the production island or similar position, in their absence. Versatility is the extension of flexibility, when a worker is able to perform various related jobs.



Flexibility and versatility in the production and/or management of a company condition workers to the company so that they will eventually follow the company’s purposes faithfully. It leads them to play on the company’s team. The ultimate reward is a better direct or indirect salary. For the company, it is reduced costs and higher productivity.



Education becomes just a credential for hiring a worker. Its place in assessing the conditions of the candidate is secondary to work experience and professional competence. The latter are the key to an applicant’s success. The more the better. Education becomes only a necessary condition, but not sufficient. What is sufficient then?&nbsp;The sufficiency of experience and skills.



Education as a credential and experience and skills as sufficiency are derived from the previous qualitative analyzes, the former theoretical and the latter observational. The theoretical analysis stems from the presentation and discussion of the P inequality measure and observational analysis from the experience of HR professionals. However, quantitative data on these dimensions are missing to anchor them in reality.



The quantitative data will be included as information becomes available. IBGE itself does not have long series with comparable data. Methodological changes have altered these series - see section 6.1.4. The solution here was to find compatible series, or nearly so, even if from different sources, so as to be able to reach some conclusion regarding the relationship between workers’ education and income.



Below are data from PNAD-Brazil&nbsp;&nbsp;for 2001 and 2011 on occupied people, by years of schooling, and the 2010 Census, by age groups, in absolute and relative magnitudes. Since, in general, age is taken as a proxy for work experience, that is, the higher an individual’s age in the market, the more he has accumulated knowledge and skills, i.e. qualification, or skills. Tables 7 and 8 were used to compare with tables 5 and 6.



Table&nbsp;3 –&nbsp;Occupied&nbsp;people&nbsp;(thousands), 10&nbsp;years&nbsp;and&nbsp;more&nbsp;of&nbsp;age,&nbsp;by&nbsp;years&nbsp;of&nbsp;schooling

and&nbsp;&nbsp;monthly&nbsp;income&nbsp;classes&nbsp;of&nbsp;all&nbsp;jobs&nbsp;–&nbsp;Brazil&nbsp;2003


Classes

Without&nbsp;and&nbsp;&nbsp;-1

1 a 3

4 a 7

8 a 10

11 a 14

15 e +

Total


Até ½

1862

1607

2731

1166

561

17

7944


½ a 1

2242

2329

4533

2644

2344

91

14183


1 a 2

1574

2389

6515

4121

5777

373

20749


2 a 3

391

770

2791

1937

3855

619

10363


3 a 5

173

381

1569

1350

3417

1255

8145


5 a 10

46

130

580

544

2042

1567

4909


10 a 20

13

36

151

157

681

1235

2273


20 e +

3

9

47

45

210

733

1047


Total

6304

7651

18917

11964

18887

5890

69613



&nbsp;Table&nbsp;4 –&nbsp;Occupied&nbsp;people&nbsp;(thousands), 10&nbsp;years&nbsp;and&nbsp;more&nbsp;of&nbsp;age,&nbsp;&nbsp;by&nbsp;years&nbsp;of&nbsp;schooling

and&nbsp;monthly&nbsp;income&nbsp;classes&nbsp;of&nbsp;all&nbsp;Jobs –&nbsp;Brazil&nbsp;2011


Classes

Without&nbsp;and-1

1 a 3

4 a 7

8 a 10

11 a 14

15 e +

Total


Até ½

1529

1001

1953

1268

871

55

6677


½ a 1

2355

1717

4466

3654

5015

364

17571


1 a 2

2075

1785

6315

6252

12662

1526

30615


2 a 3

510

414

1987

2063

5716

1678

12368


3 a 5

188

166

856

911

3468

2104

7693


5 a 10

71

60

336

400

2077

2513

5457


10 a 20

20

8

63

80

401

1238

1810


20 e +

8

3

17

20

107

492

647


Total

6756

5094

15993

14648

30317

9970

82778





Table&nbsp;5 -&nbsp;Occupied&nbsp;people&nbsp;(thousands), (%), 10&nbsp;years&nbsp;and&nbsp;more&nbsp;of&nbsp;age,&nbsp;by&nbsp;years&nbsp;of&nbsp;schooling

and&nbsp;&nbsp;monthly&nbsp;income&nbsp;classes&nbsp;of&nbsp;all&nbsp;jobs&nbsp;–&nbsp;Brazil&nbsp;2003


Classes

Without&nbsp;and&nbsp;-1

1 a 3

4 a 7

8 a 10

11 a 14

15 e +

Total


Até ½

23,4

20,2

34,4

14,7

7,1

0,2

100


½ a 1

15,8

16,4

32,0

18,6

16,5

0,6

100


1 a 2

7,6

11,5

31,4

19,9

27,8

1,8

100


2 a 3

3,8

7,4

26,9

18,7

37,2

6,0

100


3 a 5

2,1

4,7

19,3

16,5

42,0

15,4

100


5 a 10

0,9

2,6

11,8

11,1

41,6

31,9

100


10 a 20

0,6

1,6

6,6

6,9

30,0

54,3

100


20 e +

0,3

0,8

4,5

4,3

20,1

70,0

100





Table&nbsp;6 -&nbsp;Occupied&nbsp;people&nbsp;(thousands), (%), 10&nbsp;years&nbsp;and&nbsp;more&nbsp;of&nbsp;age,&nbsp;&nbsp;by&nbsp;years&nbsp;of&nbsp;schooling

and&nbsp;monthly&nbsp;income&nbsp;classes&nbsp;of&nbsp;all&nbsp;Jobs –&nbsp;Brazil&nbsp;2011


Classes

Without&nbsp;and&nbsp;-1

1 a 3

4 a 7

8 a 10

11 a 14

15 e +

Total


Até ½

22,9

15,0

29,4

19,0

13,0

0,8

100


½ a 1

13,4

9,8

25,4

20,8

28,5

2,1

100


1 a 2

6,8

5,8

20,6

20,4

41,4

5,0

100


2 a 3

4,1

3,3

16,1

16,7

46,2

13,6

100


3 a 5

2,4

2,2

11,1

11,8

45,1

27,3

100


5 a 10

1,3

1,1

6,2

7,3

38,1

46,0

100


10 a 20

1,1

0,4

3,5

4,4

22,2

68,4

100


20 e +

1,2

0,5

2,6

3,1

16,6

76,0

100



Source: PNAD –&nbsp;Except&nbsp;without&nbsp;income&nbsp;and&nbsp;declaration



The idea behind the comparison is to find out what leads an individual to earn more in the market: either because he has more years of schooling, longer time studying, or more years of age, longer time working. To find out whether it was knowledge learned at school or knowledge acquired at work that has created objective conditions to climb society’s income scale.



Thus, if it was years of schooling, the tendency is that more time studying concentrates individuals in the higher income brackets compared to years of work; otherwise, it will be years of work.



The test uses two different sources, the 2011 PNAD and the 2010 Census There was no other way, though, because IBGE did not publish comparable data for the same years in the two sources. The comparison should lose in accuracy but not in trend, because the information base is the same, i.e. the population of occupied 10-year-olds and older. But the fact that the PNAD tables are referred to all the jobs (works) and the Census to the main job (work) can cause discrepancies in absolute and relative numbers.



The assumption is that, even so, the discrepancies are not outstanding to the point of undermining the comparison. Again, the assessment of trends in the data, without worrying about the magnitudes of the absolute or relative numbers, should mitigate any errors in reliability. The same assumption holds for the one-year gap in the collection of the PNAD and Census data.



Finally, there is the weight of time, which favors the comparison. Both the data on years of schooling and years of work show the number of years that occupied people have studied or are still studying, and the number of years of work. These data in the two data sources are irrefutable as measures of knowledge and experience.



Table&nbsp;7 -&nbsp;Occupied&nbsp;people&nbsp;(thousands), 10&nbsp;years&nbsp;and&nbsp;more&nbsp;of&nbsp;age,&nbsp;&nbsp;by&nbsp;age&nbsp;groups

and&nbsp;monthly&nbsp;income&nbsp;classes&nbsp;of&nbsp;all&nbsp;Jobs –&nbsp;Brazil&nbsp;2010




Classes

10&nbsp;to&nbsp;14years

15&nbsp;to&nbsp;19years

20&nbsp;to&nbsp;24years

25&nbsp;to&nbsp;29years

30&nbsp;to&nbsp;39years

40&nbsp;to&nbsp;49years



Total


Até ½

347

1204

1001

940

1676

1034

6202


½ a 1

136

1961

3298

2895

4795

3522

16607


1 a 2

65

1513

4533

4792

7898

4644

23445


2 a 3

11

151

984

1549

2897

2043

7635


3 a 5

5

52

488

1108

2307

1890

5850


5 a 10

3

17

101

639

1624

1736

4120


10 a 20

1

4

30

165

563

809

1572


20 e +

0,4

1

10

47

227

502

787,4


Total

568,4

4903

10445

12135

21987

16180

66218,4





Table&nbsp;8 -&nbsp;Occupied&nbsp;people&nbsp;(thousands), (%), 10&nbsp;years&nbsp;and&nbsp;more&nbsp;of&nbsp;age,&nbsp;&nbsp;by&nbsp;age&nbsp;groups

and&nbsp;monthly&nbsp;income&nbsp;classes&nbsp;of&nbsp;all&nbsp;Jobs –&nbsp;Brazil&nbsp;2010


Classes

10 a 14 anos

15 a 19 anos

20 a 24 anos

25 a 29 anos

30 a 39 anos

40 a 49 anos

Total


Até ½

5,6

19,4

16,1

15,2

27,0

16,7

100


½ a 1

0,8

11,8

19,9

17,4

28,9

21,2

100


1 a 2

0,3

6,5

19,3

20,4

33,7

19,8

100


2 a 3

0,1

2,0

12,9

20,3

37,9

26,8

100


3 a 5

0

0,9

8,3

18,9

39,5

32,3

99,9


5 a 10

0

0,4

2,5

15,5

39,4

42,1

99,9


10 a 20

0,1

0,2

1,9

10,5

35,8

51,5

100


20 e +

0,1

0,1

1,3

6,0

28,8

63,7

100



Source:&nbsp;Demographic&nbsp;Census&nbsp;–&nbsp;Except&nbsp;without&nbsp;income&nbsp;and&nbsp;declaration.



Thus, the comparison of tables 6 and 8 allows tracking the evolution of individuals in the labor market, more or less in the same reference period of the surveys (2010/2011). Through the years of schooling groups and age groups, one can have an idea of which of the benchmarks had the greatest influence on the movement of individuals in the income scales of society.



The first conclusion drawn from the comparison is that both years of schooling and age positively influenced the movement of individuals. The groups gradually moved up the income scale, some more, some less, visibly. Education and work experience, in fact, help individuals’ mobility in the labor market and therefore in society.



The second conclusion, however, stands out objectively, strikingly and surprisingly. Age groups, by far, have a much more decisive and visible effect on individuals’ mobility than years of schooling. Work experience is the variable that matters most in improving the income gains of individuals in their occupations in the labor market.



This result is consistent with the answers of human resource professionals in the questionnaire mentioned above, confirming them.&nbsp;The percentages calculated in Table 8 exceed[33]&nbsp;those calculated in Table 6 in the proportionately higher income brackets along the income scale and reference groups. This means that the effect of work experience[34], as measured by age, has a much greater influence than years of schooling in the determination of better incomes for individuals in the labor market.



The differences between the percentages of years of schooling and years of work are so large and the trends presented so evident that, first, they leave no doubt as to the result found, and second, they absorb and minimize any comparison errors, as reported above.



Finally, the fact that the income from years of work refers only to the main job and the income from years of schooling refers to all jobs strengthens the evidence of the results found, in the sense that the distribution of incomes from a single job throughout years of work of individuals still surpasses the distribution of incomes from all jobs throughout the years of schooling of individuals.



6.1.6 Personal, family and household income distributions: the first decade of 2000



Moving on now to the analysis of income distribution specifically, data from 2001 to 2011 PNAD on individuals, families and households will be recovered, the P inequality measure will be calculated and the results of the income and frequency effects of all of them will be compared.



The idea is to see if changes in type of income distribution affect the results significantly, given that the incomes of individuals, after average incomes are added up and calculated, are computed for the family nucleuses to which they belong, and also for the households where different sets of families and individuals coexist in various combinations.



The hypothesis is that the profile of income inequality in the labor market, and by extension in society, is the result of the prevailing relative rigidity in income scales and occupational structures. Although differentiated according to activity sectors, regions and urban and rural populations, economic relations established between them end up defining the possibilities and solutions for remuneration of workers and jobs or occupations.



The economic subordination between smaller and larger companies and the interdependence between them in productive and commercial transactions, from the simplest to the most complex, provide objective conditions for them to define, according to the economic potential and investment projects of each one, the remuneration of workers and their occupations to carry out their production.



Yet it is precisely economic subordination and production and commercial interdependence that group together, select and arrange the forms of economic relations. In so doing, the income distribution profile is already outlined from the beginning of the system’s operation. Hence an improvement in income distribution, or reduction of its inequality, necessarily takes place within the whole economic and productive chain. Not outside it.



Such improvement and inequality reduction are at risk because they depend on the entire relationship network of companies, regions and activity sectors. It is not a simple mechanism to set in motion.



The final profile of income inequality of a society depends directly on the way social and labor relations evolved from the beginning of the existence of the country or region. If relationships were colonial or subordinated, inequality is high from the outset; if relations are close to democracy, inequality is lower from the beginning.



When inequality improved from 2000 to 2010 (Table 1), the change was due to the incorporation into the market of individuals and families who previously worked in exchange for goods or earned income below the minimum wage, through social inclusion public programs[35]. If inclusion had been sponsored and encouraged at the top of the hierarchical income scales and occupations structures, the effect on income inequality would have been nil or nearly so. If nothing had been done, on the other hand, the inequality profile probably would have remained more or less the same as before the period considered.



Presented below are the tables of income distribution, 2001 and 2011, obtained from PNAD, for individuals (Table 1860, IBGE), families (Table 1940, IBGE) and households (Table 1941, IBGE), plus the&nbsp;Theil&nbsp;index and the P inequality measure (with its effects calculated). The results are discussed further below.















Table&nbsp;9 –&nbsp;Occupied&nbsp;people&nbsp;of&nbsp;10&nbsp;years&nbsp;or&nbsp;more&nbsp;of&nbsp;age,&nbsp;value&nbsp;of&nbsp;monthly&nbsp;average&nbsp;income

and&nbsp;monthly&nbsp;income&nbsp;classes –&nbsp;Brazil&nbsp;2001-2011




Income&nbsp;classes

2001

2011




Average&nbsp;income

People&nbsp;a



Avarege&nbsp;income

People&nbsp;a


Number

%

Number

%


0 - SM

0

13758

16,6

0

9732

10,1


1 – 2 SM

123

18333

22,1

385

24190

25,1


2 – 3 SM

270

20600

24,9

790

32323

33,5


3 – 5 SM

445

10298

12,4

1332

13240

13,7


5 – 10 SM

703

8888

10,7

2101

8371

8,7


10 – 15 SM

1256

6540

7,9

3713

5899

6,1


15 – 20 SM

2474

2995

3,6

7420

1999

2,1


20 SM e +

6462

1369

1,7

17883

721

0,7


Total

521b

82781

99,9

1241b

96475

100




Source: PNAD – IBGE; a-&nbsp;thousands; b- total&nbsp;mean&nbsp;income.

Tabela 10 –&nbsp;Occupied&nbsp;Family&nbsp;members&nbsp;of&nbsp;10&nbsp;years&nbsp;or&nbsp;more&nbsp;of&nbsp;age,&nbsp;value&nbsp;of&nbsp;monthly&nbsp;average&nbsp;income&nbsp;and&nbsp;monthly&nbsp;income&nbsp;classes –&nbsp;Brazil&nbsp;2001-2011




Income&nbsp;classes

2001

2011




Average&nbsp;income

Families&nbsp;a



Average&nbsp;income

Families&nbsp;a


Number

%

Number

%


0 - SM

0

1923

3,9

0

1429

2,3


1 – 2 SM

137

6653

13,4

406

8294

13,6


2 – 3 SM

281

9791

19,7

844

14372

23,5


3 – 5 SM

451

7452

15,0

1358

11092

18,1


5 – 10 SM

708

9221

18,5

2108

12270

20,0


10 – 15 SM

1266

8391

16,8

3741

9029

14,8


15 – 20 SM

2503

4100

8,2

7333

3374

5,5


20 SM e +

6628

2261

4,5

17964

1340

2,2


Total

493b

49792

100

2272b

61200

100




Source: PNAD – IBGE; a-&nbsp;thousands; b- total&nbsp;mean&nbsp;income.

Tabela 11 –&nbsp;Occupied&nbsp;household&nbsp;members&nbsp;of&nbsp;10&nbsp;years&nbsp;or&nbsp;more&nbsp;of&nbsp;age,&nbsp;value&nbsp;of&nbsp;monthly&nbsp;average&nbsp;income&nbsp;and&nbsp;monthly&nbsp;income&nbsp;classes –&nbsp;Brazil&nbsp;2001-2011




Income&nbsp;classes

2001

2011




Average&nbsp;income

Households&nbsp;a



Average&nbsp;income

Households&nbsp;a


Number

%

Number

%


0 - SM

0

820

1,8

0

899

1,5


1 – 2 SM

139

5494

12,0

413

7321

12,6


2 – 3 SM

282

8685

18,9

846

13236

22,7


3 – 5 SM

451

6929

15,1

1360

10613

18,2


5 – 10 SM

709

8978

19,5

2112

12148

20,8


10 – 15 SM

1269

8501

18,5

3742

9284

15,9


15 – 20 SM

2505

4208

9,2

7333

3453

5,9


20 SM e +

6620

2316

5,0

17953

1360

2,3


Total

1075b

45931

100

2380b

58314

99,9




Source: PNAD – IBGE; a-&nbsp;thousands; b- total&nbsp;mean&nbsp;income.







Tabela 12 –&nbsp;Income&nbsp;inequality&nbsp;measure&nbsp;P&nbsp;and&nbsp;Theil&nbsp;Coefficient

People,&nbsp;families&nbsp;and&nbsp;households&nbsp;–&nbsp;Brazil: 2001-2011




Medidas

Indivíduos

Famílias

Domicílios


2001

2011

2001

2011

2001

2011


P

0,40

0,23

0,36

0,25

0,34

0,24


ER

0,16

0,15

0,21

0,24

0,21

0,24


EF

0,15

0,19

0,15

0,19

0,16

0,19


Theil

0,82

0,62

0,62

0,58

0,57

0,47



Fonte: Tabela 12



Inequality decreases in the period for individuals, families and households, both as measured by P, and by&nbsp;Theil. The differences in magnitudes, captured differently by the two measures, in general, higher for individuals and for families and smaller households, reflect nothing more than the units of representation.



When individuals come together in families, income differences between them are decreased, but reappear, to a lesser extent, in households. Among families, income differences are smoothed out by larger and smaller earned by their members, and end up expressed in the averages of each family.



Among households, the income differences stand out more because households are composed of individuals and families living together, in general with diverse incomes, and each group’s averages are more distant from those of the other groups, which ultimately lead to this effect on the average income of the whole group.



Two observations draw attention. The income effect is almost the same in magnitude from 2001 to 2011 for individuals, but not for families and households, when the magnitude increases in the period. The frequency effect, in turn, increases for the three units of representation, virtually maintaining the same magnitudes from 2001 to 2011.



This means that the decrease of P in the period, in the case of individuals, is due solely to the frequency effect, and in the case of families and households, to both effects simultaneously. The frequency effect for individuals brought workers who receive little or nothing up to slightly higher income brackets. Individuals move up the scale to the range of 3-5 times the minimum wage, families and households a step further, to the range of 5 to 10 minimum wages. These movements can be seen in tables 9, 10 and 11 by percentage magnitudes.



The income effect in the case of families and households helped the relative incomes (average income of each group&nbsp;i&nbsp;divided by the total average income) of workers closer to the base of the distribution to come closer to those further up the income scale, reducing somewhat and proportionally the distance between them. This effect may be, however, strongly associated with the composition of families and households, as mentioned in the paragraphs above.



Thus, there remains only the frequency effect as the main factor that clearly helped reduce income inequality from 2001 to 2011, for individuals, families and households. This result proves nothing more, nothing less, than the existence of a hidden rigidity of behavior and performance in the labor market, which usually allows proportionately more only the entry of new workers around the base of income distributions in the market, while at the same time, and mainly, it operates to limit the rise of groups in occupational structures and income scales.



This perennial bottleneck of employment, work and income opportunities[36], as already mentioned above, not only hinders a continuous reduction of inequality, which only occurs marginally and specifically, but also always reproduces the same pattern of differentiation of income and occupation between individuals, families and households.



The great engine of production and reproduction of this greater&nbsp;hierarchization&nbsp;of the market in income scales and occupational structures is due to the intrinsic functioning of the market under the capitalist system of production and distribution. Workers adjust to it in an attempt to be always trained, experienced and competent to be able to start and remain working, i.e. at the service of the market.



The novelty of this movement of income inequality reduction from 2001 to 2011 in Brazil was the strengthening of population groups, whether individuals, families or households, belonging to the intermediate income brackets in the respective distributions. The so-called middle class gained a largest number of participants, particularly groups earning 2-3 and 3-5 minimum wages, whose average incomes are closer to lower middle class. The visible sign of this movement can be seen, in recent years, among others, in the halls of the airports, shopping malls, the large number of cars on the streets, in restaurants, on holiday trips.



This healthy, progressive and efficient alternative for improving the incomes of the poor, driven and promoted by the country’s federal government in the last twelve years, however, is short lived. Not that it can be reversed in the short term. That is not the case. What can and probably should happen is that this alternative will not continue to have the same effect in the coming years. Inequality can cling to a lower level, but be resistant to further reductions.



As mentioned above, the rigidity of the Brazilian economy in the bottleneck and hierarchy of income scales and occupation structure is an obstacle that prevents inequality reduction from continuing at the same pace as in previous years, unless the country resumes development and the process of economic growth brings the expansion of new markets, both&nbsp;sectoral&nbsp;and regional, and in this new momentum income scales and occupational structures of the new enterprises are less pyramidal and more socialized.



7 - Conclusions



This paper should be seen as a first step, in the sense that it is the first time that the methodology developed here is applied to the data available in Brazil. More comprehensive and comparable data over several years were not available at IBGE. Additional research is needed.



The results found are not so surprising because other studies showed similar factors in one way or another. But they are somewhat surprising, since they are different and unconventional. Of the methodologies applied to date, the one developed here introduces additional elements of analysis that can be used to better understand the income distribution, including the observation of bottlenecks to be tackled by public policies.



But since income scales and occupational structures are produced and reproduced by the market through business organizations, and they are the main villains in income inequality, from the analytical perspective presented here, the tackling of income differences and occupational stratification increasingly requires society’s participation at all levels and representations.



Questioning why there are so many differences between incomes and occupations, or rather, why there is so much segmentation and income and labor disparity in the market, is a right and a duty of citizens and unions. If education is a credential for entry into the labor market, but a worker’s skills and experience weighs more in performing work, as reported in this paper, why can’t the dominant pattern of differentiation of workers’ productive capacity be changed?



If nothing is done in this respect, income inequality in Brazil tends to remain high. The recent drop in the last decade was made possible by the inclusion of the poor who previously earned little or nothing. Public programs were timely and crucial to this end. There is not much more room, however, to continue. Either the professional and social ladder is shortened a few steps to improve income, work and living conditions, or workers will only be replaced by others on their respective steps, or start to go down the steps rather than up.



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FISHLOW, Albert. A&nbsp;Distribuição de Renda no Brasil, A Controvérsia sobre Distribuição de Renda e Desenvolvimento.&nbsp;Zahar, Rio de Janeiro, 1975.&nbsp;

HARVEY, David.&nbsp;Os Limites do Capital. São Paulo,&nbsp;Boitempo&nbsp;Editorial, 2013.

HOBSBAWM, Eric J. Os Trabalhadores –&nbsp;Estudos sobre a História do Operariado. Rio de Janeiro, Paz e Terra, 1981.

-----------------&nbsp;Mundos do Trabalho&nbsp;– Novos Estudos sobre História Operária. Idem, 1984.

HOFFMAN, Rodolfo. “O índice de desigualdade de&nbsp;Theil-Atkinson”. Revista de Econometria, v. 11, nº 2, novembro, 1991.

LANDES, David S.&nbsp;Prometeus&nbsp;Desacorrentado – Transformação tecnológica e desenvolvimento industrial a Europa ocidental, desde 1750 até nossa época. Rio de Janeiro, Editora Nova Fronteira, 1969.

LANGONI, Carlos Geraldo.&nbsp;Distribuição da renda e desenvolvimento econômico do Brasil. Rio de Janeiro, Editora Expressão e Cultura, 1973.

MARX, Karl. O Capital. Rio de Janeiro,&nbsp;Civilização Brasileira, 1975.

MINCER, Jacob. “Investment&nbsp;in&nbsp;Human&nbsp;Capital&nbsp;and&nbsp;Personal&nbsp;Distribution&nbsp;of&nbsp;Income”. Cambridge, The&nbsp;Journal&nbsp;of&nbsp;Political&nbsp;Economy, 1958.

NOBLE, David F.&nbsp;America&nbsp;by&nbsp;Design – Science, Technology,&nbsp;and&nbsp;the&nbsp;Rise&nbsp;of&nbsp;Corporate&nbsp;Capitalism. Oxford, Oxford&nbsp;University&nbsp;Press, 1977.

PARKIN, F. Class Inequality and Political Order: Social Stratification and Capitalist and Communist Societies.&nbsp;Praeger,&nbsp;Westport, 1971.

PASTORE, José.&nbsp;Desigualdade e Mobilidade Social no Brasil. EDUSP, São Paulo, 1979.

PASTORE, José e SILVA, Nelson do Valle.&nbsp;Mobilidade Social no Brasil. São Paulo, Makron Books, 2000.

PELIANO, José Carlos.&nbsp;Acumulação de Trabalho e Mobilidade do Capital. Brasília, Editora da Universidade de Brasília, 1990.

---------------- (org).&nbsp;Automação e Trabalho na Indústria Automobilística. Brasília, Editora Universidade de Brasília, 1987.

----------------. “Demandas Sociais e Econômicas em Educação Profissional”.&nbsp;Centros Públicos de Educação Profissional – Teorias, propostas, debates e práticas.&nbsp;Brasília, Editora da UNB, 2002.

-----------------.&nbsp;Distribuição de Renda e Mobilidade Social no Brasil: A ordem e o progresso desiguais.&nbsp;Tese de Doutorado, Instituto de Economia-UNICAMP, Campinas, 1992.

---------------. “Desigualdade e Séries de Renda e Frequência”. Texto em avaliação em periódico econômico nacional. 2014.

PIKETTY, Thomas.&nbsp;O Capital no Século XXI. Rio de Janeiro, Intrínseca Editora, 2014.

SALM, Cláudio.&nbsp;Escola e Trabalho. São Paulo, Brasiliense, 1980.

SCHULTZ, Theodore W.&nbsp;O Capital Humano: Investimentos em Educação e Pesquisa. Zahar Editores, Rio de Janeiro, 1971.

SENNA, José Júlio. “Escolaridade, experiência no trabalho e salários no Brasil”. Rio de Janeiro, Revista Brasileira de Economia, 1976.

SIMONSEN, Mário Henrique. “Desigualdade e Mobilidade Social”, Ensaios de Opinião, v. 8, Rio de Janeiro, 1978.

SINGER, Paul.&nbsp;Dominação e desigualdade: estrutura de classes e repartição de renda no Brasil. Rio de Janeiro, Paz e Terra, 1981.

STIGLITZ, Joseph E.&nbsp;The&nbsp;Price&nbsp;of&nbsp;Inequality&nbsp;–&nbsp;How&nbsp;today´s&nbsp;divided&nbsp;society&nbsp;endangers&nbsp;our&nbsp;future. New York, W. W. Norton &amp;&nbsp;Company, 2012.

VALLE, Rogério de Aragão Bastos. “O Modelo de competências e as segmentações sociais”.&nbsp;Centros Públicos de Educação Profissional – Teorias, propostas, debates e práticas.&nbsp;Brasília, Editora da UNB, 2002.

WEBER, M.&nbsp;Economia&nbsp;y Sociedad: Esbozo de sociología comprensiva.&nbsp;Fondo&nbsp;de&nbsp;Cultura&nbsp;Económica,&nbsp;Méx

&nbsp;&nbsp;&nbsp;&nbsp;







[1]&nbsp;Brasilia, November, 9, 2014. Text revised, abridged and adapted from the Final Research Report submitted to the Center for Public Policy Studies (NEPP), State University of Campinas (UNICAMP), Brazil, approved on September 30, 2014.



[2]&nbsp;Among others, Weber, M.&nbsp;Economia&nbsp;y&nbsp;Sociedad:&nbsp;Esbozo&nbsp;de&nbsp;sociología&nbsp;comprensiva.&nbsp;Fondo&nbsp;de&nbsp;Cultura&nbsp;Económica, Mexico, 1964;&nbsp;Parkin, F. Class Inequality and Political Order: Social Stratification and Capitalist and Communist Societies.&nbsp;Praeger, Westport, 1971. Bourdieu, P. La Distinction: Critique&nbsp;Sociale&nbsp;du&nbsp;Jugement. Editions de Minuit, Paris, 1985.



[3]&nbsp;Not that other authors had not mentioned the social hardships brought about by the Industrial Revolution. See Engels, Friedrich.&nbsp;The Condition of the Working Class in England: from personal observations and authentic sources. São Paulo,&nbsp;Boitempo, 2008; Marx, Karl. Capital. Rio de Janeiro, Brazilian&nbsp;Civilização&nbsp;Brasileira, 1975.



[4]&nbsp;On economic, social and technological transformations between the 18th&nbsp;and 20th&nbsp;centuries that influenced work and employment conditions, see&nbsp;Baran, Paul A. and&nbsp;Sweezy, Paul M.&nbsp;Capitalismo&nbsp;Monopolista&nbsp;–&nbsp;Ensaio&nbsp;sobre&nbsp;a&nbsp;Ordem&nbsp;Econômica&nbsp;e Social Americana. Rio de Janeiro,&nbsp;Zahar&nbsp;Editores, 1966;&nbsp;Landes, David S.&nbsp;Prometeus&nbsp;Desacorrentado&nbsp;–Transformação&nbsp;tecnológica&nbsp;e&nbsp;desenvolvimento&nbsp;industrial a Europa&nbsp;ocidental,&nbsp;desde&nbsp;1750&nbsp;até&nbsp;nossa&nbsp;época. Rio de Janeiro,&nbsp;Editora&nbsp;Nova&nbsp;Fronteira, 1969; Bell, Daniel.&nbsp;O&nbsp;Advento&nbsp;daSociedade&nbsp;Pós-Industrial. São Paulo,&nbsp;Cultrix, 1973;&nbsp;Braverman, Harry.&nbsp;Trabalho&nbsp;e Capital&nbsp;Monopolista&nbsp;– A&nbsp;Degradação&nbsp;do&nbsp;Trabalho&nbsp;no&nbsp;Século&nbsp;XX. Rio de Janeiro,&nbsp;Zahar&nbsp;Editores, 1974; Noble, David F.&nbsp;America by Design – Science, Technology, and the Rise of Corporate Capitalism. Oxford, Oxford University Press, 1977;&nbsp;Hobsbawm, Eric J.&nbsp;Os&nbsp;Trabalhadores&nbsp;–Estudos&nbsp;sobre&nbsp;a&nbsp;História&nbsp;do&nbsp;Operariado. Rio de Janeiro, Paz e Terra, 1981, and&nbsp;Mundos&nbsp;do&nbsp;Trabalho&nbsp;–&nbsp;Novos&nbsp;Estudos&nbsp;sobre&nbsp;História&nbsp;Operária. Idem, 1984.



[5]&nbsp;Among others, Duarte,&nbsp;João&nbsp;Carlos. “A&nbsp;Distribuição&nbsp;da&nbsp;Renda&nbsp;no&nbsp;Brasil”,&nbsp;Revista&nbsp;de&nbsp;Administração&nbsp;de&nbsp;Empresas, v 2, nº 12, São Paulo, June, 1972;&nbsp;Langoni, Carlos GeraldoDistribuição&nbsp;de&nbsp;Renda&nbsp;e&nbsp;Desenvolvimento&nbsp;Econômico&nbsp;do&nbsp;Brasil.&nbsp;Expressão&nbsp;e&nbsp;Cultura, Rio de Janeiro, 1973;&nbsp;Fishlow, Albert. A&nbsp;Distribuição&nbsp;de&nbsp;Renda&nbsp;no&nbsp;Brasil, A&nbsp;Controvérsia&nbsp;sobreDistribuição&nbsp;de&nbsp;Renda&nbsp;e&nbsp;Desenvolvimento.&nbsp;Zahar, Rio de Janeiro, 1975;&nbsp;Pastore, José.&nbsp;Desigualdade&nbsp;e&nbsp;Mobilidade&nbsp;Social no&nbsp;Brasil. EDUSP, São Paulo, 1979;&nbsp;Simonsen,&nbsp;MárioHenrique. “Desigualdade&nbsp;e&nbsp;Mobilidade&nbsp;Social”,&nbsp;Ensaios&nbsp;de&nbsp;Opinião, v. 8, Rio de Janeiro, 1978; Costa,&nbsp;Ramonaval&nbsp;Augusto. “Mobilidade&nbsp;Social e&nbsp;Distribuição&nbsp;de&nbsp;Renda&nbsp;no&nbsp;Brasil&nbsp;–Evidência&nbsp;Empírica”, Madison, July, 1980;&nbsp;Dominação&nbsp;e&nbsp;desigualdade:&nbsp;estrutura&nbsp;de classes e&nbsp;repartição&nbsp;de&nbsp;renda&nbsp;no&nbsp;Brasil. Rio de Janeiro, Paz e Terra, 1981.



[6]&nbsp;Generally the parameter is wage/hour.



[7]&nbsp;Peliano, José Carlos.&nbsp;Distribuição&nbsp;de&nbsp;Renda&nbsp;e&nbsp;Mobilidade&nbsp;Social no&nbsp;Brasil: A&nbsp;ordem&nbsp;e o&nbsp;progresso&nbsp;desiguais. Doctoral thesis presented to the State University of Campinas (UNICAMP), Campinas, 1992.&nbsp;http://www.bibliotecadigital.unicamp.br/document/?code=000042518&amp;opt=1



[8]&nbsp;Hoffman, Rodolfo. “O&nbsp;índice&nbsp;de&nbsp;desigualdade&nbsp;de&nbsp;Theil-Atkinson”.&nbsp;Revista&nbsp;de&nbsp;Econometria, v. 11, nº 2, November, 1991.



[9]&nbsp;Peliano, José Carlos. “Desigualdade&nbsp;e&nbsp;Séries&nbsp;de&nbsp;Renda&nbsp;e&nbsp;Frequência”. Text under review in a national economic periodical. 2014.



[10]&nbsp;The visualization can be seen in more detail in&nbsp;Peliano&nbsp;(2014).



[11]&nbsp;See, for example,&nbsp;Pastore, José (1979), and&nbsp;Pastore, José and Silva, Nelson do Valle.&nbsp;Mobilidade&nbsp;Social no&nbsp;Brasil. São Paulo,&nbsp;Makron&nbsp;Books, 2000.



[12]&nbsp;See, for example,&nbsp;Landes, David S. (1969),&nbsp;Braverman, Harry (1974), and Noble, David F. (1977).&nbsp;



[13]&nbsp;Peliano, José Carlos (org).&nbsp;Automação&nbsp;e&nbsp;Trabalho&nbsp;na&nbsp;Indústria&nbsp;Automobilística. Brasilia, University of Brasília Publisher, 1987.



[14]&nbsp;Mincer, Jacob. “Investment in Human Capital and Personal Distribution of Income”. Cambridge, The Journal of Political Economy, 1958; Becker, Gary.&nbsp;Human Capital. Chicago, The University of Chicago Press, 1964, and Schultz, Theodore W.&nbsp;O Capital&nbsp;Humano:&nbsp;Investimentos&nbsp;em&nbsp;Educação&nbsp;e&nbsp;Pesquisa.&nbsp;Zahar&nbsp;Editores, Rio de Janeiro, 1971.



[15]&nbsp;Among others,&nbsp;Langoni, Carlos Geraldo.&nbsp;Distribuição&nbsp;da&nbsp;renda&nbsp;e&nbsp;desenvolvimento&nbsp;econômico&nbsp;do&nbsp;Brasil. Rio de Janeiro,&nbsp;Editora&nbsp;Expressão&nbsp;e&nbsp;Cultura, 1973;&nbsp;Senna, José&nbsp;Júlio. “Escolaridade,&nbsp;experiência&nbsp;no&nbsp;trabalho&nbsp;e&nbsp;salários&nbsp;no&nbsp;Brasil”. Rio de Janeiro,&nbsp;Revista&nbsp;Brasileira&nbsp;de&nbsp;Economia, 1976, and&nbsp;Pastore, José (1979).



[16]&nbsp;Peliano, José Carlos. “Demandas&nbsp;Sociais&nbsp;e&nbsp;Econômicas&nbsp;em&nbsp;Educação&nbsp;Profissional”.&nbsp;Centros&nbsp;Públicos&nbsp;de&nbsp;Educação&nbsp;Profissional&nbsp;–&nbsp;Teoria,&nbsp;propostas, debates e&nbsp;práticas. Brasilia, Ministry of Labor and Employment, 2002.



[17]&nbsp;Idem.



[18]&nbsp;Even the differences in levels of development from one region to another, also considered by the Theory of Human Capital as factors that lead to income inequality, are strongly marked by the respective stages of education and professional experience of their workers. In fact, education, or rather lack of it, is the most important explanation in this theory for imperfect income distribution in society.



[19]&nbsp;Among others, see&nbsp;Peliano, José Carlos.&nbsp;Acumulação&nbsp;de&nbsp;Trabalho&nbsp;e&nbsp;Mobilidade&nbsp;do Capital. Brasilia, University of Brasilia Publisher, 1990;&nbsp;Stiglitz, Joseph E.&nbsp;The Price of Inequality – How today´s divided society endangers our future. New York, W. W. Norton &amp; Company, 2012, and Harvey, David.&nbsp;Os&nbsp;Limites&nbsp;do Capital. São Paulo,&nbsp;Boitempo&nbsp;Editorial, 2013;Piketty, Thomas.&nbsp;O Capital no&nbsp;Século&nbsp;XXI. Rio de Janeiro,&nbsp;Intrínseca&nbsp;Editora, 2014.



[20]&nbsp;The reference to company should be understood as any private or public business organization that employs paid staff.



[21]&nbsp;Peliano, José Carlos (2014) presents these visual and explanatory considerations, which were presented and readapted in informative texts in&nbsp;http://brasildebate.com.br/o-dilema-entre-capacidade-e-necessidade-no-trabalho/&nbsp;and in another sequence of three texts beginning with&nbsp;http://www.cartamaior.com.br/?/Editoria/Economia/Sobre-olhares-e-numeros/7/29699, followed by&nbsp;http://www.cartamaior.com.br/?/Editoria/Economia/Desigualdade-de-renda-Uma-segunda-analise-sobre-olhares-e-numeros/7/29753, andhttp://www.cartamaior.com.br/?/Editoria/Economia/Uma-terceira-analise-sobre-olhares-e-numeros-da-desigualdade/7/29824



[22]&nbsp;The total sets of the incomes and frequencies series represent the sum of all incomes series and frequencies series surveyed by each of the individuals in the sectors, regions and population densities where they were located.



[23]&nbsp;Exercises were performed to determine whether the P inequality measure fulfills the&nbsp;Pigou-Dalton condition. This condition indicates that if an arbitrarily small value, when subtracted from income&nbsp;yi&nbsp;and added to income&nbsp;yj,, with&nbsp;yj&nbsp;&gt;&nbsp;yi, which means a regressive income transfer, the effect of the alteration should cause a Δ increase in the inequality measure. In all exercises the results achieved by P fulfilled the condition (data not shown).







[24]&nbsp;Peliano, José Carlos (2014).



[25]&nbsp;Peliano, José Carlos (1992).



[26]&nbsp;The 1991 Census could not be used due to&nbsp;unsurmountable&nbsp;methodological differences.



[27]&nbsp;Another resource for this purpose was used, as described below, pp.40 to 42.



[28]&nbsp;The methodological changes made by IBGE may probably have influenced measurements in that year.



[29]&nbsp;Census data show close correspondence between income inequality among individuals, families and households. An invisible yet striking form of social stratification permeates labor relations by activity sectors, regions and urban and rural densifications. Levels of development vary by economic and demographic region, matching the unevenness of income inequality. In general, the more developed the sectors, regions and densifications, the more unequal the income levels and the more pyramidal the occupational structures, when the latter exist.



[30]&nbsp;In particular,&nbsp;Salm,&nbsp;Cláudio.&nbsp;Escola&nbsp;e&nbsp;Trabalho. São Paulo,&nbsp;Brasiliense, 1980.



[31]&nbsp;Among others, Valle,&nbsp;Rogério&nbsp;de&nbsp;Aragão&nbsp;Bastos. “O&nbsp;Modelo&nbsp;de&nbsp;competências&nbsp;e as&nbsp;segmentações&nbsp;sociais”.&nbsp;Centros&nbsp;Públicos&nbsp;de&nbsp;Educação&nbsp;Profissional, (2002),&nbsp;op.cit.



[32]&nbsp;Information obtained by the author when conducting the research reported in&nbsp;Peliano&nbsp;(1987).



[33]&nbsp;If the percentages of the two tables were exactly the same, both years of schooling and years of work would have the same effect; if the percentages of years of schooling surpassed those of years of work, education would be more important in determining better income. In this case, however, as seen in tables 6 and 8, it was the years of life, age, representing years of work, that surpassed years of schooling, which means that experience, then, is&nbsp;&nbsp;the deciding factor, much more than education, in improving individuals’ position in the income scale of&nbsp;&nbsp;the market and society.



[34]&nbsp;It is possible and quite likely that the skills variable, mentioned by human resources professionals as one of the three most important variables for hiring (training, experience and skills), can and should be linked to work experience, as measured by age (number of years of work). The more work experience a worker has acquired in his professional life, the more skills are developed.



[35]&nbsp;Federal programs, including&nbsp;Bolsa&nbsp;Família&nbsp;(cash transfer);&nbsp;Minha&nbsp;Casa&nbsp;Minha&nbsp;Vida&nbsp;(housing); National Program for Access to Technical Education and Institutional Employment (PRONATEC).









[36]&nbsp;Typical of Brazil since the 1960s, according to the analysis made here, but also present in other capitalist countries, to a greater or lesser degree. A good institutional analysis of the differences in levels of development of countries and income conditions, work and lives of individuals from another analytical perspective, is found in&nbsp;Acemoglu,&nbsp;Daron&nbsp;&amp; Robinson, James A.&nbsp;Why Nations Fail - The Origins of Power, prosperity and poverty. Great Britain, Profile Books, 2012.