Minimum Wage Effects on Wages, Employment and Prices: Implications for Poverty Alleviation in Brazil
AbstractThis paper presents new evidence on the effects of the minimum wage using Brazilian monthly household and firm panel data between 1982 and 2000. By examining the effects on wages, employment and prices together we are able to provide an explanation for the small employment effects prevalent in the literature. Our principal finding is that increasing the minimum wage raises wages and prices with small adverse employment effects. This suggests a general wage-price inflationary spiral, where persistent inflation offsets some of the wage gains. The main policy implication deriving from these results is that the potential of the minimum wage to help the poor is bigger under low inflation. Under high inflation, the resulting wage-price spiral makes the minimum wage increase - as well as its antipoverty policy potential - short lived. In this case, the wage effects are volatile and the permanent scars are lower employment and higher inflation in Brazil.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 05/15.
Date of creation: Jul 2005
Date of revision:
Contact details of provider:
Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
Phone: +44 (0)116 252 2887
Fax: +44 (0)116 252 2908
Web page: http://www2.le.ac.uk/departments/economics
More information through EDIRC
Find related papers by JEL classification:
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Luis Eduardo Arango & Luz Karine Ardila & Miguel Ignacio Gömez, .
"Efecto del cambio del salario mínimo en el precio de las comidas fuera del hogar en Colombia,"
Borradores de Economia
584, Banco de la Republica de Colombia.
- Luis Eduardo Arango & Luz Karine Ardila & Miguel Igancio Gómez, 2010. "Efecto del cambio del salario mínimo en el precio de las comidas fuera del hogar en Colombia," BORRADORES DE ECONOMIA 006621, BANCO DE LA REPÚBLICA.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mrs. Alexandra Mazzuoccolo).
If references are entirely missing, you can add them using this form.