Does an Increasing Minimum Wage Reduce Formal Sector Employment? Evidence from Brazil

Urzúa, Sergio; Saltiel, Fernando

doi:10.1086/714114

Cited by 7 publications

(3 citation statements)

References 42 publications

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“…Although research has not yet examined in detail the reasons behind the recent rise in inequality, it is reasonable to believe that it is closely linked with the economic slowdown. Economic growth before the 2014 recession enabled a steady increase in the minimum wage that led to sizable inequality reduction without any noticeable negative effects on employment or informality [3], [6]. As the economy entered a recession period, the minimum wage ceased to increase.…”

Section: Declining Inequality During the 2000's Was Halted By The 201...mentioning

confidence: 99%

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The labor market in Brazil, 2001–2022

Firpo

2024

izawol

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Inequality reduction in Brazil between 2001 and 2014 resulted from factors that allowed for pro-poor economic growth. These included increases in the real value of the minimum wage, a larger supply of skilled workers, and declining informality. After 2014, economic recession led to an increase in unemployment and informality that disproportionately hurt those at the bottom of the wage distribution. To spur economic growth in an inclusive manner, Brazil should implement reforms in its social protection and tax systems, aiming at enhancing efficiency without reducing coverage, as well as guaranteeing access to high-quality public education to every young Brazilian.

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Section: Declining Inequality During the 2000's Was Halted By The 201...mentioning

confidence: 99%

“…Version 2 of this articles updates figures and adds findings on the effects of Covid-19. It adds new Further readings as well as new Key references [1], [2], [3], [4], [5], [6], [7], [9], [10], [11], [12], and [13].…”

Section: Acknowledgmentsmentioning

confidence: 99%

The labor market in Brazil, 2001–2022

Firpo

2024

izawol

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“…They find that the increase in the minimum wage reduces wage dispersion but has little negative employment effect. However, the Kaitz index in Brazil has increased rapidly between 2004 and 2007 by more than 10 percentage points (see Saltiel and Urzúa (2020)). For other periods, the pace of the minimum wage hike was rather gradual.…”

Section: Related Literaturementioning

confidence: 99%

The Economic Effects of a Rapid Increase in the Minimum Wage: Evidence from South Korea Experiments

Doh¹,

Kim²,

Lee³

2022

RWP

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South Korea raised the nation-wide minimum wage substantially over the past two years (2018 and 2019), and the minimum wage rose from 53 percent of the median wage to 63 percent. While the minimum wage has been increasing steadily over the decades, the rapid pace was largely unexpected and driven by a sudden shift in the political environment. We study the economic effects of this minimum wage hike on employment, wages, and labor productivity using South Korean manufacturing firm data. We also supplement our analysis using other data sources covering the service sector to ensure that sectorspecific factors do not drive our main results. We find a significant negative employment effect of the minimum wage hike for 2018-2019 compared to its modest increase in the 2015-2017 period as the fraction of firms exposed to the minimum wage shock substantially increases and these firms respond to the shock by adjusting through both intensive (layoff) and extensive (plant closing) margins. We also observe labor productivity and wages increased more for firms with higher exposure to the minimum wage. A simple task-based production model emphasizing the substitution between labor of different skill levels is consistent with our empirical findings.

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Latin American pride: Labor market outcomes of sexual minorities in Brazil

Tampellini

2024

Journal of Development Economics

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Does an Increasing Minimum Wage Reduce Formal Sector Employment? Evidence from Brazil

Cited by 7 publications

References 42 publications

The labor market in Brazil, 2001–2022

The labor market in Brazil, 2001–2022

The Economic Effects of a Rapid Increase in the Minimum Wage: Evidence from South Korea Experiments

Latin American pride: Labor market outcomes of sexual minorities in Brazil

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