The North-South divide: real wages in Brazil during the early 20th century


What was the size of Brazil`s regional inequality in living standards during the first decades of the 20th century? This paper presents municipal and state information for wages and prices to build a real wage index for skilled and unskilled workers between 1912 and 1940. Difference in nominal wages and costs of living were large across regions, but real wage differentials were still smaller than those estimated from earlier studies. Williamson (1999) argued that the Southeast-Northeast wage gap was 7.2 during the 1930s, but new evidence shows that wages were in fact 1.6 times higher in the Southeast. Moreover, annual data for São Paulo and Pernambuco shows that there was no increase in real wages between 1923 and 1940.

working paper