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Wage determination in Brazil: The growth of union bargaining power and informal employment


  • Francisco Carneiro
  • Andrew Henley


This article examines wage determination in Brazilian manufacturing during the 1980s and early 1990s. It presents evidence to show that the reduction in state regulation of collective bargaining has led to the development of a system of wage determination which is increasingly characterised by rent sharing and insider trade union bargaining power. Real wages appear increasingly inflexible with respect to movements in open unemployment, with a large informal sector disciplining formal sector wage bargaining and cushioning the impact of broader labour market conditions. An important consequence of this is that the employment costs of a successful counter-inflationary strategy may be very severe.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:jdevst:v:34:y:1998:i:4:p:117-138
    DOI: 10.1080/00220389808422531

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    References listed on IDEAS

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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. Olivier Bargain & Prudence Kwenda, 2014. "The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 63(1), pages 117-153.
    3. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
    4. repec:sbe:breart:v:20:y:2000:i:1:a:2775 is not listed on IDEAS
    5. Naércio Aquino Menezes-Filho & Marc-Andreas Muendler & Garey Ramey, 2008. "The Structure of Worker Compensation in Brazil, with a Comparison to France and the United States," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 324-346, May.
    6. G. Reza Arabsheibani & Francisco Galrao Carneiro & Andrew Henley, 2006. "Changes in human capital and earnings inequality: Recent evidence from Brazil," Journal of Development Studies, Taylor & Francis Journals, vol. 42(5), pages 837-867.
    7. Arbache, Jorge Saba & Carneiro, Francisco Galrao, 1999. "Unions and Interindustry Wage Differentials," World Development, Elsevier, vol. 27(10), pages 1875-1883, October.
    8. Lesley O'Connell, 1999. "Sistemas de negociación colectiva en seis países latinoamericanos: grados de autonomía y descentralización (Argentina, Brasil, Chile, México, Perú y Venezuela)," Research Department Publications 4169, Inter-American Development Bank, Research Department.
    9. Ghosh, Jayati. & Sengupta, Amitayu. & Roychoudhury, Anamitra., 2008. "The impact of macroeconomic change on employment in the retail sector in India : policy implications for growth, sectoral change and employment," ILO Working Papers 994132343402676, International Labour Organization.
    10. repec:ilo:ilowps:433276 is not listed on IDEAS
    11. Lesley O'Connell, 1999. "Collective Bargaining Systems in Six Latin American Countries: Degrees of Autonomy and Decentralization (Argentina, Brazil, Chile, Mexico, Peru, and Uruguay)," Research Department Publications 4168, Inter-American Development Bank, Research Department.
    12. Sara Lemos, 2004. "A Menu Of Minimum Wage Variables For Evaluating Wages and Employment Effects: Evidence From Brazil," Labor and Demography 0403009, EconWPA.
    13. Ceyhun Elgin, 2012. "Unionization and informal economy," Economics Bulletin, AccessEcon, vol. 32(3), pages 2615-2623.
    14. G. Reza Arabsheibani & Francisco Galrao Carneiro & Andrew Henley, 2003. "Human capital and earnings inequality in Brazil, 1988-98 : quantile regression evidence," Policy Research Working Paper Series 3147, The World Bank.
    15. Sara Lemos, 2004. "The Effects Of The Minimum Wage On Wages And Employment In Brazil - A Menu Of Minimum Wage Variables," Labor and Demography 0403008, EconWPA.
    16. Jorge Saba Arbache, 1999. "Trade Liberalisation and Insider Power: The Case of Brazil," Studies in Economics 9902, School of Economics, University of Kent.
    17. Galli, Rossana & Kucera, David, 2004. "Labor Standards and Informal Employment in Latin America," World Development, Elsevier, vol. 32(5), pages 809-828, May.
    18. Ana Barufi & Eduardo Haddad & Peter Nijkamp, 2016. "A comprehensive analysis of the wage curve in Brazil: Non-linearities, urban size, and the spatial dimension," ERSA conference papers ersa16p279, European Regional Science Association.
    19. 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.
    20. Filhoz, Naercio Aquino Menezes & Muendler, Marc-Andreas & Ramey, Garey, 2005. "The Structure of Worker Compensation in Brazil, With a Comparison to France and the United States¤," University of California at San Diego, Economics Working Paper Series qt55q3h7nj, Department of Economics, UC San Diego.
    21. repec:ilo:ilowps:413234 is not listed on IDEAS
    22. Folawewo, A. O., 2006. "Determinants of Informal Sector Labour Demand: An Application of Alternative Methodological Approaches to South Western States of Nigeria," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(2).
    23. White, Simon., 1999. "Job quality and small enterprise development," ILO Working Papers 993458063402676, International Labour Organization.

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