Educational mismatch and labour market outcomes in Brazil

Abstract

In this thesis, I investigate in more depth important topics in labour economics in Brazil. In particular, in the first chapter, I examine the incidence of educational mismatch in the Brazilian formal labour market, and I estimate its effects on wages controlling for workers' heterogeneity. Furthermore, I test what would be the effect on aggregate wages if the mismatched workers were reallocated to a well-matched position. As a result, I find that half of the workers are mismatched, and overeducated (undereducated) workers earn less (more) than their co-workers with the same attained education, but who hold a well-matched position. Additionally, I find that reassigning workers to a well-matched occupation would increase aggregate wages while changing people's education to eliminate the mismatch would decrease aggregate wages.

In the second chapter, I use two measures of the minimum wage to investigate how changes in the minimum wage policy affect investments on education acquisition on-the-job, through changes in the wage distribution and skill premia. The findings show that changes in the absolute minimum wage are associated with compression of the skill premia, particularly for higher education, and has a negative impact on educational investments. On the contrary, the relative minimum wage is associated with an increase in the skill premia for higher education but has no significant effect on education acquisition on-the-job on average.

Finally, in the third chapter, I examine the effects of internal migration on job transitions by instrumenting migration with violent crime shocks at the origin state. In particular, I focus on young people entering the labour market. The results show that without controlling for self-selection, migrants are positively selected and earn more, on average, than non-migrants. In contrast, after the self-selection is taken into account, on average, migrants are negatively selected and earn less. The impact is stronger on men and low-educated workers. In addition, I find that migrants coming from richer states are positively selected, while those coming from poorer states are negatively selected. These findings may indicate forced migration only for poorer origin states.

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ORCID for Thomas Gall: orcid.org/0000-0003-2257-1405

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