The Persistent Inequality in the Great Brazilian Cities: The Case of Braśılia

Using the censuses of 2000 and 2010, we have noticed that the inequality of the household per capita income in the biggest Brazilian cities did not show a trend of reduction, differently from the whole country. Also, the inequality in those cities is substantially higher than the Brazilian. We investigate the determinants of this high and persistent inequality for Brasília (Federal District). We use the static decomposition of the generalized entropy indexes and the decomposition by regression with the method of Fields and the Shapley value. We verified that the public sector was the main factor to explain why the inequality was kept high in the capital of Brazil. All the methods reached the same conclusion. While the shrinking differences on the education attainment of the population had an effect of reducing the inequality, the policy of paying better salaries to the public servants had the opposite effect, which preserved the high inequality. This policy induces the migration to Brasília and it has a long run impact on the retirements and pensions benefits, which perpetuates the disparities. Key-Words: Brasília (Federal District); Public Sector; Inequality Decomposition; Generalized Entropy Indexes; Fields method; Shapley value. JEL Classification: C21, C71, D31, I24, J31, O15. * University of Brasília, Brasília – Brazil. Email for contact [email protected]. Paper presented as Bachelor’s Thesis at the University of Brasília, August 2013. Supervisor: PhD Michael Christian Lehmann.