The Distributional Effects of Minimum Wages in Brazil: 1996-2001

Public Policy Institute of California Working Paper No. 2003.23

Posted: 22 Oct 2003

See all articles by David Neumark

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Wendy Cunningham

World Bank

Lucas Siga

New York University (NYU) - Abu Dhabi

Date Written: September 2003

Abstract

The Brazilian economy has relied on the minimum wage since it was first implemented in 1940. Brazil's newly elected President recently 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 the incomes of poor and low-income families. The goal of this paper is to evaluate the efficacy of the minimum wage in bringing about these changes in Brazil. We examine data drawn from Brazil's major metropolitan areas and study the years following the conclusion of its hyperinflation. The estimates provide no evidence that, in the lower-wage metropolitan areas where their effects should be apparent, minimum wages in Brazil lift family incomes at the lower points of the income distribution.

Keywords: Minimum wage, wages, employment, poverty

JEL Classification: I38, J23, O17

Suggested Citation

Neumark, David and Cunningham, Wendy and Siga, Lucas, The Distributional Effects of Minimum Wages in Brazil: 1996-2001 (September 2003). Public Policy Institute of California Working Paper No. 2003.23, Available at SSRN: https://ssrn.com/abstract=448983

David Neumark (Contact Author)

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

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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Wendy Cunningham

World Bank ( email )

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Lucas Siga

New York University (NYU) - Abu Dhabi ( email )

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United Arab Emirates

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