Minimum wage effects throughout the wage distribution: evidence from Brazil’s formal and informal sectors
This paper investigates the effects of minimum wages on the income and employment of individuals, using longitudinal data from Brazil’s Monthly Employment Survey over the 1982-1997 period. We use information on 541,194 individuals, for which we consider data from two interviews performed 12 months apart. Our sample is restricted to workers aged 15 to 65 in the first interview, that were (initially) employed as formal salaried (62%), informal salaried (20%) or self-employed (18%). We provide detailed estimates of minimum wage effects at different points of the complete wage distribution, and calculate both contemporaneous and lagged effects, for formal and informal workers. We also estimate, indirectly, the effect of minimum wages on the probability of transitioning into different sectors of the labor market: salaried formal and informal work, self-employment, unemployment and inactivity. In order to provide some insight into the potential effects of minimum wages on family welfare and poverty, we obtain separate estimates for men and women, for workers under and above age 21, and for household heads and non-heads. We find significant minimum wage effects across the whole wage distribution, and both in the formal and the informal sectors. We also find that the total impact of minimum wages on workers earnings (derived from current and lagged effects) is positive but smaller than the contemporaneous one. As for employment elasticities, our estimates suggest that they are negative for most low-wage workers, being lower in absolute value for formal salaried workers (around -0.1 at the bottom of the wage distribution) than for low-wage informal salaried and self employed (between -0.25 and -0.35). Other results include higher earnings elasticities for men, adults and heads of households than for women, teenagers and non-heads, respectively.
|Date of creation:||2001|
|Date of revision:|
|Contact details of provider:|| Postal: Cedeplar-FACE-UFMG Av. Antonio Carlos, 6627 Belo Horizonte, MG 31270-901 Brazil|
Fax: +55 31 3201-3657
Web page: http://www.cedeplar.ufmg.br
More information through EDIRC
|Order Information:|| Postal: Cedeplar-FACE-UFMG Av. Antonio Carlos, 6627 Belo Horizonte, MG 31270-901 Brazil|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Abowd, John M & Kramarz, Francis & Margolis, David N, 1999.
"Minimum Wages and Employment in France and the United States,"
CEPR Discussion Papers
2159, C.E.P.R. Discussion Papers.
- Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1998. "Minimum Wages and Employment in France and the United States," Papiers du Laboratoire de MicroÃ©conomie AppliquÃ©e 1998-12, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "Minimum Wages and Employment in France and the United States," NBER Working Papers 6996, National Bureau of Economic Research, Inc.
- John M. Abowd & Francis Kramarz & David Margolis & Thomas Philippon, 1999. "Minimum Wages and Employment in France and the United States," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00370392, HAL.
- Machin, Stephen & Manning, Alan, 1996. "Employment and the Introduction of a Minimum Wage in Britain," Economic Journal, Royal Economic Society, vol. 106(436), pages 667-76, May.
- Marcelo Neri & Gustavo Gonzaga & José Márcio Camargo, 1998.
"Efeitos informais do salário mínimo e pobreza,"
Textos para discussão
393, Department of Economics PUC-Rio (Brazil).
- Gonzaga, Gustavo Maurício & Camargo, José Márcio & Neri, Marcelo Cortes, 2000. "Efeitos informais do salário mínimo e pobreza," Economics Working Papers (Ensaios Economicos da EPGE) 372, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- David Neumark & Mark E. Schweitzer & William L. Wascher, 1999.
"The effects of minimum wages throughout the wage distribution,"
9919, Federal Reserve Bank of Cleveland, revised Feb 2000.
- David Neumark & Mark Schweitzer & William Wascher, 2000. "The Effects of Minimum Wages Throughout the Wage Distribution," NBER Working Papers 7519, National Bureau of Economic Research, Inc.
- Neumark, D. & Schweitzer, M. & Wascher, W., 1999. "The Effect of Minimum Wages Throughout the Wage Distribution," Papers 9919, London School of Economics - Centre for Labour Economics.
- David Neumark & William L. Wascher, 1995.
"Minimum wage effects on school and work transitions of teenagers,"
Finance and Economics Discussion Series
95-7, Board of Governors of the Federal Reserve System (U.S.).
- Neumark, David & Wascher, William, 1995. "Minimum-Wage Effects on School and Work Transitions of Teenagers," American Economic Review, American Economic Association, vol. 85(2), pages 244-49, May.
- Card, David & Krueger, Alan B, 1994.
"Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania,"
American Economic Review,
American Economic Association, vol. 84(4), pages 772-93, September.
- David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
- Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, World Bank Group, vol. 13(2), pages 275-302, May.
- Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-49, May.
- Brown, Charles & Gilroy, Curtis & Kohen, Andrew, 1982. "The Effect of the Minimum Wage on Employment and Unemployment," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 487-528, June.
- 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.
When requesting a correction, please mention this item's handle: RePEc:cdp:texdis:td151. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gustavo Britto)
If references are entirely missing, you can add them using this form.