The effects of the minimum wage in Brazil on the distribution of family incomes: 1996-2001

David Neumark, Wendy Cunningham, Lucas Siga

Research output: Contribution to journalArticle

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% 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.

Original languageEnglish (US)
Pages (from-to)136-159
Number of pages24
JournalJournal of Development Economics
Volume80
Issue number1
DOIs
StatePublished - Jun 2006

Keywords

  • Brazilian economy
  • Family income
  • Minimum wage

ASJC Scopus subject areas

  • Development
  • Economics and Econometrics

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