The contribution of minimum wage valorization policy to the decline in household income inequality in Brazil: A decomposition approach

Brito, Alessandra Scalioni; Foguel, Miguel Nathan; Kerstenetzky, Celia Lessa

doi:10.1080/01603477.2017.1333436

Cited by 20 publications

(15 citation statements)

References 32 publications

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“…It is not only the biggest Latin American economy, but also the country with the third highest level of income inequality in the region (UNDP, 2018). Similar to that observed in other Latin American economies, income inequality in Brazil has been declining since the mid-1990s, with large reductions after 2002 (Brito, Foguel, & Kerstenetzky, 2017). However, there are large differences in the dynamics of income inequality across regions in Brazil over the years.…”

Section: Introductionsupporting

confidence: 61%

“…The decline in income inequality is attributed, among other factors, to economic prosperity and financial stability that Brazil experienced at the beginning of the 21st century (Barros, Carvalho, Franco, & Mendonça, 2007), increase in the share of formal employment in the labor market (Ramos, 2015), the implementation of public policies such as income transfers to the poor (Hoffman, 2006;Soares, 2006;Soares, Soares, Medeiros, & Osório, 2006), better educational attainment (Barros, Franco, & Mendonça, 2007a;Ferreira et al, 2006), the decline of segmentation and discrimination in the labor market (Barros & Mendonça, 1995), and the minimum wage valorization policy (Brito, Foguel, & Kerstenetzky, 2017).…”

Section: Income Inequalit Y In Brazilmentioning

confidence: 99%

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Persistence and determinants of income inequality: The Brazilian case

Signor

Kim

Tebaldi

2019

Review Development Economics

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Latin America, which is a region known for its high and persistent income inequality levels, experienced a significant decline in income inequality since the second half of the 1990s. Brazil is a particularly interesting case in Latin America. While the country presented notable economic growth and improvements in income distribution in the early 2000s, Brazil continues to experience high levels of income inequality in comparison with other Latin American or advanced economies. This research contributes to the literature by examining the key drivers of income distribution and the degree of persistence of income inequality among Brazilian states. This research also improves upon previous works by using more recent and comprehensive data and addressing concerns regarding heterogeneity and endogeneity by using the system GMM estimation method. Our findings show that income inequality is highly persistent across Brazilian states and that government policies including income transfer programs made important contributions to reduce income inequality in Brazil. This study also shows that the decline in labor income ratios between different ethnic groups and the increase of the share of formal jobs in the labor market contributed to reduce income inequality.

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Section: Introductionsupporting

confidence: 61%

Section: Income Inequalit Y In Brazilmentioning

confidence: 99%

Persistence and determinants of income inequality: The Brazilian case

Signor

Kim

Tebaldi

2019

Review Development Economics

View full text Add to dashboard Cite

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“…There are various practices of building the counterfactual in terms of income distribution, such as uprating with the inflation rate, change with the average or median income growth, or change with the income growth rate by deciles, quintiles etc. [62,80]. For reasons of availability and data accuracy, in this paper, we have chosen to build the counterfactual by modifying the household income with specific average growth rates.…”

Section: Methodology and Datamentioning

confidence: 99%

“…To be more precise, by successively substituting the values of each determinant (source of income in our case) at the starting point (2013) with the values at the final moment (2014), we can estimate their marginal contribution to the total change in income inequality. Because our goal was to estimate the impact of the minimum wage adjustment upon income inequality, following Brito's approach [62], the household income has been divided into two major components: labor income and other sources of income, while each of them, theoretically, can further on be divided into incomes related to the minimum wage and incomes that are not related to the level of the minimum wage.…”

Section: Methodology and Datamentioning

confidence: 99%

“…Azevedo et al [61] have studied the main determinants of income inequality in Latin American countries following a decomposition approach and their analysis shows that most part of the reduction in income inequality over the past decade is due to the increase of low incomes. Brito et al [62] have analyzed the contribution of the Brazilian minimum wage policy on reducing household income inequality and found that the minimum wage had a 64% contribution to the decline in income inequality during 1995-2014. Analyzing for the period 1996-2001, Neumark et al [63] proved that the minimum wage pushes wages from the lower area of the distribution to a higher level, as growth was mandatory for low-wage workers, but no impact was identified on the wages of top-level workers.…”

Section: Literature Reviewmentioning

confidence: 99%

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Assessing Minimum Wage Policy Implications upon Income Inequalities. The Case of Romania

Militaru¹,

Popescu

Cristescu

et al. 2019

Sustainability

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Starting from the consideration that excessive income inequalities could hamper sustainable growth, our paper aims to evaluate the impact of the minimum wage policy upon wage and income distributions. Using the European Union Survey on Income and Living Conditions (EU-SILC) database with national representative sample of households, an income distribution analysis was conducted for the case of Romania based on two microsimulation approaches. The first one assumed building a counterfactual income distribution under the hypothesis of no change in minimum wage, while the second one implied a decomposition of the Gini coefficient of income inequalities based on main income determinants, including the minimum wage level and the share of minimum wage earners in the total number of employees. Both approaches pointed to similar findings, indicating a positive effect of the minimum wage on wage inequalities reduction for both genders, although higher for women, as they are more present among lower paid employees. The minimum wage policy can reshape the wage distribution, by enlarging the share of minimum income earners and narrowing the middle. Moreover, the household disposable income becomes less unequal when minimum wage increases, meaning that the income gain spreads over the entire household as most minimum wage earners come from poor households with numerous children.

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Linking Human Development and the Financial Responsibility of Regions: Combined Index Proposals Using Methods from Data Envelopment Analysis

et al. 2020

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Several indicators on human development and capabilities have been introduced in recent decades that measure the absolute level of deprivations and freedoms of people. However, these indicators typically do not consider to what extent regions and countries efficiently spend their limited financial resources on improving human development. This is an important shortcoming because regions typically face different financial constraints in developing social policies and promoting human development. In this article, we advance methods from data envelopment analysis (DEA) to measure absolute capability values and the social efficiency of 129 Brazilian mesoregions. We present a new indicator called the Capability Index Adjusted by Social Efficiency (CIASE) that evaluates the human development performance of regions based on their absolute levels of deprivations as well as their social efficiency in translating limited financial resources into human development. Moreover, we introduce a Deprivation and Financial Responsibility based Prioritization Index (DFRP) that helps to identify priority regions for higher public expenditures in human development. Our results for the case of Brazil show that several poor regions perform relatively better in terms of social efficiency than in terms of absolute human development. Conversely, several rich regions perform relatively worse in terms of social efficiency than in absolute values. Thus, our analysis shows how DEA methods can help to bridge perspectives that are often presented as separated issues but could be strong allies for development: attending to human deprivation and promoting social efficiency.

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The contribution of minimum wage valorization policy to the decline in household income inequality in Brazil: A decomposition approach

Cited by 20 publications

References 32 publications

Persistence and determinants of income inequality: The Brazilian case

Persistence and determinants of income inequality: The Brazilian case

Assessing Minimum Wage Policy Implications upon Income Inequalities. The Case of Romania

Linking Human Development and the Financial Responsibility of Regions: Combined Index Proposals Using Methods from Data Envelopment Analysis

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