Earnings Inequality and the Minimum Wage: Evidence from Brazil

Working Paper
Published on 11 May 2021

Abstract

Moser and Engbom (2021) show that a rise in the minimum wage accounts for a large decline in earnings inequality in Brazil since 1994. To this end, they combine rich administrative and survey data with an equilibrium model of the Brazilian labour market. Their results imply that the minimum wage has far-reaching spillover effects on wages higher up in the distribution, accounting for one third of the 25.9 log point fall in the variance of log earnings in Brazil since 1994. At the same time, the minimum wage’s effects on employment and output are muted by reallocation of workers toward more productive firms.

Authors

Niklas Engbom

New York University

Christian Moser

Columbia Business School