WAGE DIFFERENTIATION IN THE STATE OF SERGIPE: AN ANALYSIS BETWEEN ARACAJU METROPOLITAN REGION AND THE OTHER MUNICIPALITIES

Abstract

This paper aims to study the wage differentiation between individuals residing in the Aracaju Metropolitan Region (RMA) and individuals living in other Sergipe municipalities. Therefore, microdata from the Demographic Census of 2010 are used to estimate mincerian regressions and applies the Oaxaca-Blinder decomposition to analyze the Endowment and Return effects, with correction of the selection bias proposed by Heckman. In general, the main results show that all variables are significant and with the expected signs according to the literature, whereas the highest income is obtained by the RMA residents. In addition, both the return effect and the endowment effect, observed through the Oaxaca-Blinder decomposition, are negative for those who do not reside in the RMA. This means that if the schooling, gender, age, race, and experience effects of those not residing in the metropolitan area were the same as those living in the metropolitan area, they would, under any circumstances, receive a lower income. Furthermore, the results suggest that the control variables used in the estimations do not favor the reduction of the income inequality among the municipalities of Sergipe.