The average Brazilian worker in 1998 had received more years of schooling than comparable workers in 1982. During the same period, Brazil went through a series of economic structural adjustment policies. This article investigates how these 2 simultaneous advances altered the relationship between labor market earnings and education. We find that the economic reward for staying in school for 1 more year fundamentally changed from 1982 to 1998. Returns to tertiary education increased sharply, whereas returns to primary and lower secondary education dropped, 26% and 35%, respectively. In the same time period, wage inequality was reduced. We argue that this reduction was linked to a reduction in returns to schooling and was only secondarily linked to a more equitable distribution of schooling. Moreover, our findings suggest that the available supply of highly skilled labor inadequately meets demand. Therefore, policy action aiming at increasing access and completion of tertiary education is desirable. An increased supply would improve prospects for both economic growth and reductions in wage inequality. [ABSTRACT FROM AUTHOR]