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Minimum Wage Policy and Employment Effects: Evidence from Brazil

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  • Sara Lemos

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Abstract

The international literature on minimum wages greatly lacks empirical evidence for Latin America. In Brazil, not only are minimum wage increases large and frequent, but they also have been used as both a social policy and an anti-inflationary policy. This paper estimates the effects of the minimum wage on wages and employment using panel data techniques and Brazilian monthly household data from 1982 to 2000. A number of conceptual and identification questions are discussed. For example, the paper summarizes various strategies on how best to measure the effect of a constant (national) minimum wage, presenting a menu of minimum wage variables that are then used to estimate wage and employment effects. The paper also uses an employment decomposition that separately estimates the effect of the minimum wage on hours per worker and on the number of jobs. Robust results indicate that an increase in the minimum wage strongly compresses the wages distribution with small adverse effects on employment.

Suggested Citation

  • Sara Lemos, 2004. "Minimum Wage Policy and Employment Effects: Evidence from Brazil," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2004), pages 219-266, August.
  • Handle: RePEc:col:000425:008666
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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. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, Elsevier.
    3. Haroon Bhorat & Tara Caetano & Benjamin Jourdan & Ravi Kanbur & Christopher Rooney & Benjamin Stanwix & Ingrid Woolard, 2016. "Investigating the Feasibility of a National Minimum Wage for South Africa," Working Papers 201601, University of Cape Town, Development Policy Research Unit.
    4. Haroon Bhorat & Ravi Kanbur & Benjamin Stanwix, 2017. "Minimum Wages in Sub-Saharan Africa: A Primer," World Bank Research Observer, World Bank Group, vol. 32(1), pages 21-74.
    5. Manoel BITTENCOURT, 2009. "Macroeconomic Performance And Inequality: Brazil, 1983-94," The Developing Economies, Institute of Developing Economies, vol. 47(1), pages 30-52.
    6. International Monetary Fund, 2016. "Cross-Country Report on Minimum Wages; Selected Issues," IMF Staff Country Reports 16/151, International Monetary Fund.
    7. Groisman, Fernando & Boffi, Santiago & Calero, Analía & Cuba, María Soledad & Liniado, Julia & Sconfienza, María Eugenia & Vergara Parra, Albano, 2015. "Social protection to the informal sector: the role of minimum wage and income transfer policies," MPRA Paper 72822, University Library of Munich, Germany.
    8. Sara Wong, 2017. "Minimum wage impacts on wages and hours worked of low-income workers in Ecuador," Working Papers PMMA 2017-14, PEP-PMMA.
    9. Alexandros Karakitsios & Manos Matsaganis, 2018. "Minimum Wage Effects on Poverty and Inequality," DEOS Working Papers 1801, Athens University of Economics and Business.
    10. Anita Alves Pena, 2013. "Do Minimum Wage Laws Affect People Who Are Not Covered? Evidence from Documented and Undocumented, Hourly and Piece Rate Workers in U.S. Agriculture," Upjohn Working Papers and Journal Articles 13-194, W.E. Upjohn Institute for Employment Research.
    11. Selin Pelek, 2015. "The Employment Effect of the Minimum Wage: An Empirical Analysis From Turkey," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 4(1), pages 49-68, January.
    12. Nguyen Viet, Cuong, 2010. "The Impact of a Minimum Wage Increase on Employment, Wages and Expenditures of Low-Wage Workers in Vietnam," MPRA Paper 36751, University Library of Munich, Germany, revised 15 Aug 2011.
    13. repec:bla:rdevec:v:21:y:2017:i:4:p:1081-1112 is not listed on IDEAS
    14. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
    15. 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.
    16. repec:spr:jlabre:v:38:y:2017:i:3:d:10.1007_s12122-017-9241-z is not listed on IDEAS
    17. Sara Lemos, 2006. "Anticipated effects of the minimum wage on prices," Applied Economics, Taylor & Francis Journals, vol. 38(3), pages 325-337.
    18. Fernando Borraz & Nicolás González-Pampillón, 2017. "Assessing the distributive effects of minimum wage," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 1081-1112, November.
    19. Andalón, Mabel & Pagés, Carmen, 2008. "Minimum Wages in Kenya," IZA Discussion Papers 3390, Institute for the Study of Labor (IZA).
    20. Cuong Viet Nguyen, 2013. "The impact of minimum wages on employment of low-wage workers," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(3), pages 583-615, July.
    21. Soundararajan, Vidhya, 2014. "Minimum Wage Effects at Different Enforcement Levels: Evidence from Employment Surveys in India," Working Papers 180133, Cornell University, Department of Applied Economics and Management.
    22. repec:bla:indrel:v:47:y:2016:i:5-6:p:513-529 is not listed on IDEAS
    23. Calavrezo, Oana & Pelek, Selin, 2011. "Qui sont les salariés payés au niveau du salaire minimum? Une analyse empirique à partir de données turques," GIAM Working Papers 11-2, Galatasaray University Economic Research Center, revised 13 Feb 2011.

    More about this item

    Keywords

    minimum wage; wage effect; employment effect; labor costs; Brazil;

    JEL classification:

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

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