Abstract This study investigates the relationship between unequal regional development and racial and gender wage inequality in Brazil. Using sample data from the 1991 Brazilian census, I estimated monthly wages for a white, brown and black women and men working in the states of Sao Paulo and Bahia. The findings suggest that while women and Afro-Brazilians in Brazil's most developed region of Silo Paulo had the advantages of higher levels of state sponsored work benefits and more equitable occupational and wage distribution, they nevertheless experienced the greatest discrimination. In contrast, the less developed state of Bahia where racial and gender gaps in education, occupation and wages were the most severe, wage discrimination was lowest.
Keywords: labor market discrimination, race and gender, Brazil, regional development
No other country in the Americas has constructed such a persistent ideology of racial equality as Brazil. Often contrasted to the United States, Brazilian post-slavery race relations were said to be harmonious, tolerant and devoid of prejudice or discrimination. The image of presumed equality was based primarily on Brazil's unparalleled level of miscegenation among European, African and indigenous peoples.  Widespread intermixing of the population gave rise to a unique pattern of social differentiation in which, allegedly, racial appearances (phenotype) rather than origin was key. Due tote resulting ambiguity of racial identity, many Brazilians denied the existence of race or racism in their country. Race relations in Brazil, as a result, received much attention, especially among North American social scientists.
However, recent empirical research has amply documented the persistence of racial prejudice and discrimination. Brazil's image of racial equality has eroded greatly over the past two decades. Today, vigorous public debate over Brazil's image of racial equality has displaced the ideology of racial democracy. The overwhelming evidence makes clear that racial inequality, prejudice and discrimination are Brazil's social reality.
Scholars often have argued that one of the basic determinants of contemporary racial inequality is the geographic polarization of Brazil's economy and population (Hasenbalg 1979, 1985; Andrews 1992). Of the total population in 1991, 44.5 percent of the 69,651,161 Afro-Brazilians lived in the impoverished and underdeveloped Northeast, while the white population (52 percent) was concentrated in the industrialized Southeast (IBGE 1996). Thus because of locational disadvantages, Afro-Brazilians are said to be handicapped because they are concentrated in regions where there are fewer social and economic opportunities.
Unequal regional development and population distribution has characterized Brazilian society since colonial times (Merrick and Graham 1979; Wood and Carvalho 1988). Population and regional imbalances are the legacy of the boom and bust cycles of three colonial export commodities: sugar, gold and coffee. The scarcity of labor to fuel sugar plantations during the sixteenth- and seventeenth-centuries was the impetus for importing African slaves into the Northeast. In the eighteenth-century, with the discovery of gold and the concomitant decline in sugar production, the economic and population center of gravity shifted to central and southern Brazil. This shift left the once wealthy northeastern plantation economy in ruins and from this point on development favored southern Brazil. It was the southern expansion of coffee exports during late nineteenth- and early twentieth-centuries that led to the incipient industrialization of Sao Paulo, built first on slave and later subsidized European immigrant labor. 
The great fortunes accumulated from coffee exports provided the foundation to build Sao Paulo's industrial economy and attracted roughly 3.5 million European immigrants. By the 1920s Sao Paulo became the most advanced region of the country and by the 1940s the state had the largest concentration of manufacturing in all of Latin America (Wood and Carvalho 1988). …