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The Effects Of The Minimum Wage On Wages And Employment In Brazil - A Menu Of Minimum Wage Variables

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  • Sara Lemos

Abstract

The international literature on minimum wage strongly lacks empirical evidence from developing countries. In Brazil, not only are increases in the minimum wage large and frequent - unlike the typically small increases focused upon in most of the existing literature - but also the minimum wage plays a central and complex role. In addition to its social role the minimum wage has been used as anti-inflationary policy, confirming its importance to the Brazilian Economy. This paper analyzes the effects of the minimum wage on both wages and employment using monthly household-level data (similar to the US CPS) over a reasonably long time period. A number of conceptual and identification questions is here discussed. Various strategies on how to best measure the effect of a constant (national) minimum wage are summarized in a “menu” of minimum wage variables. Also, an employment decomposition that separately estimates the hours worked and the number of jobs effects is used. Robust results indicate that an increase in the minimum wage strongly compresses the wages distribution with moderately small adverse effects on employment.

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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0403008.

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Length: 45 pages
Date of creation: 04 Mar 2004
Date of revision:
Handle: RePEc:wpa:wuwpla:0403008

Note: Type of Document - pdf; prepared on win98; pages: 45
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Web page: http://128.118.178.162

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Keywords: minimum wage; Brazil;

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  1. 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.
  2. Richard Dickens & Stephen Machin & Alan Manning, 1994. "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain," CEP Discussion Papers dp0183, Centre for Economic Performance, LSE.
  3. Maria Cristina Cacciamali & André Portela & Eduardo F. de Freitas, 1994. "O papel do salário mínimo nos anos 80: novas observações para o caso brasileiro," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 48(1), pages 29-46, January.
  4. Francisco Carneiro & Andrew Henley, 1998. "Wage determination in Brazil: The growth of union bargaining power and informal employment," Journal of Development Studies, Taylor & Francis Journals, vol. 34(4), pages 117-138.
  5. Richard Dickens & Stephen Machin & Alan Manning, 1994. "Estimating the effect of minimum wages on employment from the distribution of wages: a critical view," LSE Research Online Documents on Economics 51648, London School of Economics and Political Science, LSE Library.
  6. David Card, 1992. "Using Regional Variation in Wages to Measure the Effects of the Federal Minimum Wage," Working Papers 680, Princeton University, Department of Economics, Industrial Relations Section..
  7. David Card & Alan B. Krueger, 1998. "A Reanalysis of the Effect of the New Jersey Minimum Wage Increase on the Fast-Food Industry with Representative Payroll Data," NBER Working Papers 6386, National Bureau of Economic Research, Inc.
  8. Richard V. Burkhauser & T. Aldrich Finegan, 1989. "The minimum wage and the poor: The end of a relationship," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(1), pages 53-71.
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  10. Burkhauser, Richard V & Couch, Kenneth A & Wittenburg, David C, 2000. "A Reassessment of the New Economics of the Minimum Wage Literature with Monthly Data from the Current Population Survey," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 653-80, October.
  11. Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, vol. 74(2), pages 79-83, May.
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  13. Baker, Michael & Benjamin, Dwayne & Stanger, Shuchita, 1999. "The Highs and Lows of the Minimum Wage Effect: A Time-Series Cross-Section Study of the Canadian Law," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 318-50, April.
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Cited by:
  1. T.H. Gindling & Katherine Terrell, 2004. "Legal Minimum Wages and the Wages of Formal and Informal Sector Workers in Costa Rica," William Davidson Institute Working Papers Series 2004-647, William Davidson Institute at the University of Michigan.
  2. Gindling, T. H. & Terrell, Katherine, 2004. "The Effects of Multiple Minimum Wages Throughout the Labor Market," IZA Discussion Papers 1159, Institute for the Study of Labor (IZA).
  3. Gindling, T.H. & Terrell, Katherine, 2005. "The effect of minimum wages on actual wages in formal and informal sectors in Costa Rica," World Development, Elsevier, vol. 33(11), pages 1905-1921, November.
  4. Andreas P. Georgiadis, 2006. "Is the Minimum Wage Efficient? Evidence of the Effects of the UK National Minimum Wage in the Residential Care Homes Sector," The Centre for Market and Public Organisation 06/160, Department of Economics, University of Bristol, UK.

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