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The Effects of the Minimum Wage in Brazil on the Distribution of Family Incomes: 1996-2001

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Listed:
  • David Neumark

    () (Department of Economics, University of California-Irvine)

  • Wendy Cunningham

    (World Bank)

  • Lucas Siga

    (World Bank)

Abstract

The Brazilian economy has long relied on the minimum wage, having first implemented a minimum in 1940. Shortly after taking office in 2003, Brazil’s President raised the minimum wage by 20 percent and promised to double the value of the minimum wage before his term ends in 2006. The usual rationale for minimum wage increases is to bring about beneficial changes in the income distribution, by raising incomes of poor and low-income families. The goal of this paper is to evaluate the efficacy of the minimum wage in Brazil in bringing about these changes in the income distribution. We examine data drawn from Brazil’s major metropolitan areas, studying the years after Brazil’s hyper-inflation ended. The estimates provide no evidence that minimum wages in Brazil lift family incomes at the lower points of the income distribution; if anything some of the evidence points to adverse effects on lower-income families.

Suggested Citation

  • David Neumark & Wendy Cunningham & Lucas Siga, 2004. "The Effects of the Minimum Wage in Brazil on the Distribution of Family Incomes: 1996-2001," Working Papers 050627, University of California-Irvine, Department of Economics.
  • Handle: RePEc:irv:wpaper:050627
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    References listed on IDEAS

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    1. James J. Heckman & Carmen Pagés, 2004. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Books, National Bureau of Economic Research, Inc, number heck04-1.
    2. Charles Brown & Curtis Gilroy & Andrew Kohen, 1982. "The Effect of the Minimum Wage on Employment and Unemployment: A Survey," NBER Working Papers 0846, National Bureau of Economic Research, Inc.
    3. 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).
    4. David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, January.
    5. David Neumark & Mark Schweitzer & William Wascher, 2005. "The Effects of Minimum Wages on the Distribution of Family Incomes: A Nonparametric Analysis," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 867-894.
    6. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163 Elsevier.
    7. William Maloney & Jairo Mendez, 2004. "Measuring the Impact of Minimum Wages. Evidence from Latin America," NBER Chapters,in: Law and Employment: Lessons from Latin America and the Caribbean, pages 109-130 National Bureau of Economic Research, Inc.
    8. 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.
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    10. Ricardo Paes de Barros & Carlos Henrique Corseuil & Miguel N. Foguel & Philippe G. Leite, 2001. "Uma avaliação dos impactos do salário mínimo sobre o nível de pobreza metropolitana no Brasil," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 2(1), pages 47-71, January-J.
    11. Neri, Marcelo Côrtes, 2002. "Decent work and the informal sector in Brazil," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 461, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    12. David Neumark & DMark Schweitzer & DaWilliam Wascher, 2004. "Minimum Wage Effects throughout the Wage Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
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    14. 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.
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