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Political Variables as Instruments for the Minimum Wage

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  • Sara Lemos

    (UCL, Londres)

Abstract

The international literature on minimum wage greatly lacks empirical evidence from developing countries. In Brazil, not only are increases in the minimum wage large and frequent but also the minimum wage has been used as anti-inflation policy in addition to its social role. This paper estimates the effects of the minimum wage on employment using monthly household data from 1982 to 2000 aggregated at regional level. A number of conceptual and identification questions is discussed as tentative explanation of the non-negative estimates found in the literature, for example: (1) The use of political variables as excluded exogenous instruments for the minimum wage variable; (2) The superiority of “spike” over “fraction affected” and “Kaitz index” as a minimum wage variable; (3) The decomposition of the minimum wage employment effect into hours worked and number of jobs effects; (4) Robustness checks accounting for sorting into informal and public sectors. Robust results to various alternative specifications and instrumental variables indicate that an increase in the minimum wage has moderately small adverse effects on employment.

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Paper provided by ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics] in its series Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting] with number f08.

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Date of creation: 2003
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Handle: RePEc:anp:en2003:f08

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Cited by:
  1. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
  2. Fernando Borraz & Nicolás Gonzalez Pampillón, 2011. "Assessing the Distributive Impact of More than Doubling the Minimum Wage: The Case of Uruguay," Documentos de Trabajo (working papers) 1711, Department of Economics - dECON.
  3. Lemos, Sara, 2004. "The Effect of the Minimum Wage on Prices in Brazil," IZA Discussion Papers 1071, Institute for the Study of Labor (IZA).
  4. Sara Lemos, 2004. "A Menu Of Minimum Wage Variables For Evaluating Wages and Employment Effects: Evidence From Brazil," Labor and Demography 0403009, EconWPA.
  5. Sara lemos, 2004. "The Effects of the Minimum Wage in the Formal and Informal Sectors in Brazil," Discussion Papers in Economics 04/8, Department of Economics, University of Leicester.
  6. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
  7. Sara lemos, 2004. "The Effects of the Minimum Wage on Wages, Employment and Prices," Discussion Papers in Economics 04/10, Department of Economics, University of Leicester.
  8. Hanna Frings, 2013. "The Employment Effect of Industry-Specific, Collectively Bargained Minimum Wages," German Economic Review, Verein für Socialpolitik, vol. 14(3), pages 258-281, 08.
  9. Jellal, Mohamed, 2012. "Maroc salaire minimum emploi et pauvreté
    [Morocco minimum wage employment and poverty]
    ," MPRA Paper 38491, University Library of Munich, Germany.
  10. Sen, Anindya & Rybczynski, Kathleen & Van De Waal, Corey, 2011. "Teen employment, poverty, and the minimum wage: Evidence from Canada," Labour Economics, Elsevier, vol. 18(1), pages 36-47, January.

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