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A Menu of Minimum Wage Variables for Evaluating Wages and Employment Effects: Evidence from Brazil

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  • Sara Lemos

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Abstract

The international literature on minimum wage greatly lacks empirical evidence from developing countries. Brazil’s minimum wage policy is a distinctive and central feature of the Brazilian economy. Not only are increases in the minimum wage large and frequent but also the minimum wage has been used as an anti-inflation policy in addition to its social role. This study estimates the effects of the minimum wage on both wages and employment using panel data techniques and Brazilian monthly household data from 1982 to 2000 at individual and regional levels. A number of conceptual and identification questions is discussed, for example: (1) Various strategies on how to best measure the effect of a constant (national) minimum wage are summarized in a “menu” of minimum wage variables and used to estimate wage and employment effects. (2) An employment decomposition that separately estimates the effect of the minimum wage on hours worked and on the number of jobs is used. Robust results indicate that an increase in the minimum wage strongly compresses the wages distribution with moderately small adverse effects on employment.

Suggested Citation

  • Sara Lemos, 2004. "A Menu of Minimum Wage Variables for Evaluating Wages and Employment Effects: Evidence from Brazil," Discussion Papers in Economics 04/3, Department of Economics, University of Leicester.
  • Handle: RePEc:lec:leecon:04/3
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    Cited by:

    1. Fernando Alberto Groisman & Albano Blas Vergara & Analía Calero & Julia Liniado & María Eugenia Sconfienza & Maria Soledad Cubas & Santiago Boffi, 2015. "Social Protection to the Informal Sector: The Role of Minimum Wage and Income Transfer Policies," Working Papers PMMA 2015-10, PEP-PMMA.
    2. Neumark, David & Cunningham, Wendy & Siga, Lucas, 2006. "The effects of the minimum wage in Brazil on the distribution of family incomes: 1996-2001," Journal of Development Economics, Elsevier, vol. 80(1), pages 136-159, June.
    3. 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; informal sector; public sector; Brazil;

    JEL classification:

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

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