Anticipated Effects of the Minimum Wage on Prices
AbstractThere is little empirical evidence on the effect of minimum wage increases on prices, particularly for developing countries. This paper estimates this effect using monthly Brazilian household and firm data over 18 years. As minimum wage increases in Brazil are large, frequent and affect a sizable fraction of the labor force, they affect aggregate prices. Because of this expected price effect, rational agents may take such increases as a signal for future price and wage bargains. Indeed, robust results indicate that the minimum wage raises overall prices not only on the month of the increase, but also in the two months before.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 04/25.
Date of creation: Aug 2004
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- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
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