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The Effects Of The Minimum Wage On Wages And Employment In Brazil - A Menu Of Minimum Wage Variables

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  • Sara Lemos

Abstract

The international literature on minimum wage strongly lacks empirical evidence from developing countries. In Brazil, not only are increases in the minimum wage large and frequent - unlike the typically small increases focused upon in most of the existing literature - but also the minimum wage plays a central and complex role. In addition to its social role the minimum wage has been used as anti-inflationary policy, confirming its importance to the Brazilian Economy. This paper analyzes the effects of the minimum wage on both wages and employment using monthly household-level data (similar to the US CPS) over a reasonably long time period. A number of conceptual and identification questions is here discussed. Various strategies on how to best measure the effect of a constant (national) minimum wage are summarized in a “menu” of minimum wage variables. Also, an employment decomposition that separately estimates the hours worked and the number of jobs effects 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. "The Effects Of The Minimum Wage On Wages And Employment In Brazil - A Menu Of Minimum Wage Variables," Labor and Demography 0403008, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0403008
    Note: Type of Document - pdf; prepared on win98; pages: 45
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    References listed on IDEAS

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    1. Dickens, Richard & Machin, Stephen & Manning, Alan, 1998. "Estimating the effect of minimum wages on employment from the distribution of wages: A critical view," Labour Economics, Elsevier, vol. 5(2), pages 109-134, June.
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    Cited by:

    1. T.H. Gindling & Katherine Terrell, 2004. "Legal Minimum Wages and the Wages of Formal and Informal Sector Workers in Costa Rica," William Davidson Institute Working Papers Series 2004-647, William Davidson Institute at the University of Michigan.
    2. T. H. Gindling & Katherine Terrell, 2004. "The Effects of Multiple Minimum Wages Throughout the Labor Market," William Davidson Institute Working Papers Series 2004-701, William Davidson Institute at the University of Michigan.
    3. Gindling, T.H. & Terrell, Katherine, 2005. "The effect of minimum wages on actual wages in formal and informal sectors in Costa Rica," World Development, Elsevier, vol. 33(11), pages 1905-1921, November.
    4. T. H. Gindling & Katherine Terrell, 2004. "Legal Minimum Wages and the Wages of Formal and Informal Sector Workers in Costa Rica," UMBC Economics Department Working Papers 04-102, UMBC Department of Economics.
    5. Andreas P. Georgiadis, 2006. "Is the Minimum Wage Efficient? Evidence of the Effects of the UK National Minimum Wage in the Residential Care Homes Sector," The Centre for Market and Public Organisation 06/160, Department of Economics, University of Bristol, UK.

    More about this item

    Keywords

    minimum wage; Brazil;

    JEL classification:

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

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