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Earnings Inequality and the Minimum Wage: Evidence from Brazil

Niklas Engbom and Christian Moser ()

No 6393, CESifo Working Paper Series from CESifo Group Munich

Abstract: We quantify the effect of a minimum wage on compression throughout the earnings distribution. Using the case of Brazil, which experienced a large decrease in earnings inequality while its real minimum wage increased from 1996-2012, we document that the inequality decrease was bottom-driven yet widespread, with compression up to the 75th earnings percentile. We develop an equilibrium search model with heterogeneous firms and workers and find that effects of the minimum wage are consistent with the above facts, explaining 70 percent of the observed inequality decrease, with half of the decrease due to spillovers further up the earnings distribution.

Keywords: worker and firm heterogeneity; minimum wage; matched employer-employee data; equilibrium search model (search for similar items in EconPapers)
JEL-codes: E24 E61 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
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Related works:
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2018) Downloads
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2017) Downloads
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2016)
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