Political Variables as Instruments for the Minimum Wage

Sara Lemos

Labor and Demography from University Library of Munich, Germany

Abstract: The international literature on minimum wage greatly lacks empirical evidence from developing countries. In Brazil, not only are increases in the minimum wage large and frequent but also the minimum wage has been used as anti-inflation policy in addition to its social role. This paper estimates the effects of the minimum wage on employment using monthly household data from 1982 to 2000 aggregated at regional level. A number of conceptual and identification questions is discussed as tentative explanation of the non-negative estimates found in the literature, for example: (1) The use of political variables as excluded exogenous instruments for the minimum wage variable; (2) The superiority of “spike” over “fraction affected” and “Kaitz index” as a minimum wage variable; (3) The decomposition of the minimum wage employment effect into hours worked and number of jobs effects; (4) Robustness checks accounting for sorting into informal and public sectors. Robust results to various alternative specifications and instrumental variables indicate that an increase in the minimum wage has moderately small adverse effects on employment.

Keywords: minimum wage; wage effect; employment effect; informal sector; Brazil; politics (search for similar items in EconPapers)
JEL-codes: J38 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004-03-04
Note: Type of Document - pdf; prepared on win98; pages: 30
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https://econwpa.ub.uni-muenchen.de/econ-wp/lab/papers/0403/0403010.pdf (application/pdf)

Related works:
Journal Article: Political Variables as Instruments for the Minimum Wage (2005)
Working Paper: Political Variables as Instruments for the Minimum Wage (2004)
Working Paper: Political Variables as Instruments for the Minimum Wage (2004)
Working Paper: Political Variables as Instruments for the Minimum Wage (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpla:0403010

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