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The Effects of the Minimum Wage on Wages, Employment and Prices

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  • Sara lemos

Abstract

This paper puts together evidence for the wages, employment and price effects of the minimum wage. This overall picture will help to understand the small employment effects prevalent in the literature in the light of price effects. The data used is an under-explored monthly Brazilian household survey from 1982 to 2000, similar to the US CPS. As the international literature on the minimum wage is scanty on non-US empirical evidence, in particular on developing countries, this paper will also help to extend the current understanding on the effects of the minimum wage in developing countries. This is crucial if the minimum wage is to be used as a policy to help poor people in poor countries.

Suggested Citation

  • Sara lemos, 2004. "The Effects of the Minimum Wage on Wages, Employment and Prices," Discussion Papers in Economics 04/10, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:04/10
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    References listed on IDEAS

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    1. Lemos Sara, 2005. "Political Variables as Instruments for the Minimum Wage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-33, December.
    2. Pablo Fajnzylber, 2001. "Minimum Wage Effects Throughout the Wage Distribution: Evidence from Brazil's Formal and Informal Sectors," Anais do XXIX Encontro Nacional de Economia [Proceedings of the 29th Brazilian Economics Meeting] 098, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    3. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163, Elsevier.
    4. Sara lemos, 2004. "The Effects of the Minimum Wage in the Private and Public Sectors in Brazil," Discussion Papers in Economics 04/12, Division of Economics, School of Business, University of Leicester.
    5. Dickens, Richard & Machin, Stephen & Manning, Alan, 1999. "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 1-22, January.
    6. Pablo Fajnzylber, 2001. "Minimum wage effects throughout the wage distribution: evidence from Brazil’s formal and informal sectors," Textos para Discussão Cedeplar-UFMG td151, Cedeplar, Universidade Federal de Minas Gerais.
    7. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
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    Cited by:

    1. Lemos Sara, 2005. "Political Variables as Instruments for the Minimum Wage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-33, December.
    2. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
    3. Obeng, Samuel Kwabena, 2015. "An empirical analysis of the relationship between minimum wage, investment and economic growth in Ghana," MPRA Paper 65674, University Library of Munich, Germany.
    4. Belser, Patrick. & Rani, Uma., 2010. "Extending the coverage of minimum wages in India : simulations from household data," ILO Working Papers 994584553402676, International Labour Organization.
    5. Fitriya & Abdul Basyith & Rabin Ibnu Zainal, 2020. "The Doubled-Edge Sword of Raising the Minimum Wage: The Case of Indonesia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(12), pages 1453-1465, December.
    6. Sara Lemos, 2004. "A Menu Of Minimum Wage Variables For Evaluating Wages and Employment Effects: Evidence From Brazil," Labor and Demography 0403009, University Library of Munich, Germany.
    7. Lemos, Sara, 2004. "The Effect of the Minimum Wage on Prices in Brazil," IZA Discussion Papers 1071, Institute of Labor Economics (IZA).
    8. Pablo Blanchard & Paula Carrasco & Rodrigo Ceni & Cecilia Parada & Sofía Santín, 2021. "Distributive and displacement effects of a coordinated wage bargaining scheme," Documentos de Trabajo (working papers) 21-26, Instituto de Economía - IECON.
    9. Acevedo Rueda, Rafael Alexis & Sanchez, Yasmin, 2013. "El consumo, ingreso y ahorro del Venezolano: un primer análisis descriptivo de la V República [Venezuelan's consumption, incomes and savning: a first descriptive analysis of the V Republic]," MPRA Paper 58211, University Library of Munich, Germany, revised 2014.
    10. Tan Boon Seng & Stephen Ko, 2010. "The Minimum Wage Policy in Hong Kong," Asia Pacific Journal of Public Administration, Taylor & Francis Journals, vol. 32(2), pages 163-176, December.
    11. Bielschowsky, Ricardo & del Castillo, Miguel & Squeff, Gabriel Coelho & Orozco, Roberto & Beteta, Hugo E., 2022. "A strategy for development with income redistribution: the minimum wage and growth fronts in Mexico," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    12. Neumark, David & Munguía Corella, Luis Felipe, 2021. "Do minimum wages reduce employment in developing countries? A survey and exploration of conflicting evidence," World Development, Elsevier, vol. 137(C).
    13. Obeng, Samuel Kwabena, 2015. "An Empirical Analysis of the Relationship between Minimum Wage, Investment and Economic Growth in Ghana," African Journal of Economic Review, African Journal of Economic Review, vol. 3(2), July.
    14. Hoxha Adriatik, 2010. "Causal relationship between prices and wages: VECM analysis for Germany," EuroEconomica, Danubius University of Galati, issue 26, pages 90-106, November.
    15. Gabriel Ulyssea & Miguel N. Foguel, 2006. "Efeitos do Salário Mínimo Sobre o Mercado de Trabalho Brasileiro," Discussion Papers 1168, Instituto de Pesquisa Econômica Aplicada - IPEA.
    16. Cosmin ENACHE, 2012. "Unemployment Benefit, Minimum Wage And Average Salary Earnings In Romania," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 10, pages 85-96, December.
    17. M. A. Ivanova, 2016. "Analysis of the nature of cause-and-effect relationship between inflation and wage in Russia," Studies on Russian Economic Development, Springer, vol. 27(5), pages 575-584, September.
    18. Gligor Bishev & Tatjana Boshkov, 2015. "Arguments for and Against Retaining Exchange Rate Regime: An Empirical Analysis for Republic of Macedonia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(8), pages 1004-1013, August.

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    More about this item

    Keywords

    minimum wage; wage effect; employment effect; price effect; cost shock; pass-through; Brazil;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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    This paper has been announced in the following NEP Reports:

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