Earnings Inequality and the Minimum Wage: Evidence from Brazil

Christian Moser and Niklas Engbom

No 16143, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We show that a 128 percent real increase in the minimum wage accounts for a large decline in earnings inequality in Brazil between 1996 and 2018. To this end, we combine administrative and survey data with an equilibrium model of the Brazilian labor market. Our results imply that the minimum wage has far-reaching spillover effects on wages higher up in the distribution, accounting for 45 percent of a large fall in earnings inequality over this period. At the same time, the effects of the minimum wage on employment and output are muted by reallocation of workers toward more productive firms.

Keywords: Inequality; Wage distribution; Minimum wage; Worker and firm heterogeneity; Equilibrium search model; Monopsony; Spillover effects; Reallocation; Employment; Brazil (search for similar items in EconPapers)
JEL-codes: E24 E25 E61 E64 J31 J38 (search for similar items in EconPapers)
Date: 2021-05
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Related works:
Journal Article: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2022)
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2021)
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2018)
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2018)
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2017)
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2017)
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2016)
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