We’re covering today Brazil’s puzzling increase in medium income. The rise of bankruptcies. And Petrobras’ plan for the post-pandemic world.
What is happening to Brazil’s average income?
Economic crisis, high unemployment rates (with even bigger levels of labor underutilization), and an uptick in bankruptcies. All of these factors are likely to indicate a massive fall in workers’ average income. That is what happened during the 2014-2016 crisis. However, as the chart below shows, in 2020 the opposite has been observed. With the coronavirus crisis, workers’ average income has abruptly increased.
How to explain. Economist Daniel Duque, of think tank Fundação Getulio Vargas, says there are multiple hypotheses to explain this highly counterintuitive trend.
- Composition effect. As we showed in yesterday’s Weekly Report, the crisis has shut down more low-paying jobs — which usually comprise tasks that don’t allow for remote work. Also, this crisis has been particularly harsh on informal workers — which earn less money than their formal counterparts. By reducing the universe of low-paying workers, the data could be skewed upwards.
- Survey issues. The pandemic has forced the Brazilian Institute of Geography and Statistics to abandon its traditional survey methods of in-person interviews, for an exclusively...