We found that differences in the structure of occupations account for little in
both cases. Prices were not insubstantial in explaining difference between the US and
Brazil, with this being due largely to steeper returns to education in Brazil. But the most
important source of Brazil's uniquely large income inequality is the underlying inequality in
the distribution of its human and non-human endowments. In particular, the main causes of
Brazil's inequality - and indeed of its urban poverty - seem to be poor access to education
and claims on assets and transfers that potentially generate non-labor incomes.
The importance of these non-labor incomes was one of our chief findings. Income
distribution in Brazil would be much improved if only the distribution of this income
component was more similar to those of the US or Mexico - themselves hardly paragons of
the Welfare State. If this is due to public transfers, which needs to be investigated further, it
is possible that our findings would vindicate those who have argued for a speedier public
approach to the reduction in inequality than that which would be available from educational
policies alone.