Earnings Inequality and the Minimum Wage: Evidence from Brazil
Niklas Engbom, Christian Moser
American Economic Review · 2022 · Volume 112 · Issue 12
Abstract
Increases in the minimum wage can substantially reduce earnings inequality. To demonstrate this, we combine administrative and survey data with an equilibrium model of the Brazilian labor market. We find that a 128 percent increase in the real minimum wage in Brazil between 1996 and 2018 had far-reaching spillover effects on wages higher up in the distribution. The increased minimum wage accounts 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
Personal Income, Wealth, and Their Distributions, Macroeconomics: Production, Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital, Aggregate Labor Productivity, Wage Level and Structure, Wage Differentials, Compensation, and Labor Costs: Public Policy, Economic Development: Human Resources, Human Development, Income Distribution, Migration
Enable JavaScript for citation tools and additional paper interactions.