An Overview of the Effects of the Minimum Wage on the Brazilian Labor Market
Catholic University of Brasilia Working Paper No. 39 - 2002
34 Pages Posted: 22 Jul 2002
Date Written: June 2001
Abstract
This article presents an overview of the principal results of research on the impact of the minimum wage on the Brazilian labor market. The effects of the minimum wage on employment, wage levels, and poverty are analyzed, as is the relationship between the minimum wage and the government deficit. Also presented is a brief history of minimum wage policy in Brazil, as well as a description of the profile of workers who earn the minimum wage in this country. Our critical analysis of the results found in literature identifies both their limitations and their principal contributions to the debate. Special attention is paid to the various methodologies and databases used to analyze the impact of the minimum wage on employment, wage levels, and poverty. The overview is comprehensive and is intended to aid discussions about the future of minimum wage policy in Brazil. In general, we found a certain degree of consensus among the studies we reviewed. They tend to indicate that the minimum wage has a negative effect on employment in the formal sector, only a limited ability to affect wages higher than the minimum wage, insignificant effects in terms of poverty reduction, and a significant impact on the deficit in the social security system.
Keywords: Minimum age, employment, poverty
JEL Classification: J23, J51
Suggested Citation: Suggested Citation
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