Challenges in the Brazilian labor market: Pre- and post-pandemic wage gaps

• Informality in Brazil rose post-pandemic, becoming a survival strategy despite offering lower wages and fewer protections. • Average hourly wages fell by 6.74% between 2019 and 2022, with formal workers experiencing sharper declines. • Non-white, female, and low-educated workers were disproportionately affected, deepening existing inequalities. • The informal sector did not act as a buffer during the crisis; instead, labor force withdrawal was the main adjustment. • Difference-in-Differences models showed that formality did not shield workers from wage losses. • Policy recommendations include targeted formalization, wage recovery, and investment in education and equity. This study analyzes the impact of the COVID-19 pandemic on the occupations and wages of formal and informal workers in Brazil, focusing on social inequalities. It uses data from the PNADC for the first quarter of 2019 and 2022. Wage determinants were estimated using the Mincer equation and the Tobit model with Difference in Differences. The results indicate an increase in informality, wage penalties for women, non-white individuals, and workers with low education. The pandemic reduced the incomes of all groups, with a greater decline among formal workers, highlighting structural inequalities and barriers to social mobility.