Does race response shift impact racial inequality?

Previous research posits that racial reclassification, or response shift, may confound measures of racial earnings inequality. However, this claim has not been systematically tested. We measure racial response shift in Brazil and examine its impact on white-to-nonwhite earnings inequality between survey waves over ten years at nine-month intervals. We use individual-level linked data from the 2002-2012 Monthly Employment Survey, involving Brazil's six largest metropolitan areas (n = 400,046). We describe the level and pattern of racial reclassification across time and by income rank. We then decompose racial inequality into two components (income and population ratios) to examine the impact of racial response shift on estimates of racial inequality and to construct analytic counterfactuals. CONTRIBUTION