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Earnings Inequality and the Minimum Wage: Evidence from Brazil

Niklas Engbom and Christian Moser ()

MPRA Paper from University Library of Munich, Germany

Abstract: We show that a minimum wage can have large effects throughout the earnings distribution, using a combination of theory and empirical evidence. To this end, we develop an equilibrium search model featuring empirically relevant worker and firm heterogeneity. We use the estimated model to evaluate a 119 percent increase in the real minimum wage in Brazil from 1996 to 2012. Direct and indirect effects of the policy account for a substantial decline in earnings inequality, with modest negative employment consequences. Using administrative linked employer-employee data and two household surveys, we find reduced-form evidence supporting the model predictions.

Keywords: Worker and Firm Heterogeneity; Equilibrium Search Model; Monopsony; Spillover Effects; Minimum Wage (search for similar items in EconPapers)
JEL-codes: E2 E20 E24 E25 E26 E6 E60 E61 E64 J3 J30 J31 J38 J42 J46 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-dge, nep-lam and nep-mac
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https://mpra.ub.uni-muenchen.de/95384/1/MPRA_paper_95384.pdf original version (application/pdf)

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 (2017) Downloads
Working Paper: Earnings Inequality and the Minimum Wage: Evidence from Brazil (2016)
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