61 lines
2.5 KiB
YAML
61 lines
2.5 KiB
YAML
cite: Sotomayor2021
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author: Sotomayor, Orlando J.
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year: 2021
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title: Can the minimum wage reduce poverty and inequality in the developing world? Evidence from Brazil
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publisher: World Development
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uri: https://doi.org/10.1016/j.worlddev.2020.105182
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pubtype: article
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discipline: economics
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country: Brazil
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period: 1995-2015
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maxlength: 12
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targeting: implicit
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group: workers
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data: national administrative surveys Monthly Employment survey (PME)
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design: quasi-experimental
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method: difference-in-difference estimator
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sample: 40000
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unit: household
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representativeness: national, census
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causal: 1
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theory:
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limitations: survey data limited to per dwelling, can not account for inhabitants moving
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observation:
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- intervention: minimum wage
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institutional: 1
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structural: 0
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agency: 0
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inequality: income
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type: 0
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indicator: 0
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measures: poverty
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findings: within three months of minimum wage increases poverty declined by 2.8%
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channels:
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direction: -1
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significance: 2
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- intervention: minimum wage
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institutional: 1
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structural: 0
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agency: 0
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inequality: income
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type: 0
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indicator: 1
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measures: Gini coeff
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findings: inequality declined by 2.4%; decreasing impact over time; diminishing returns when minimum is high relative to median earnings
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channels: unemployment costs (job losses) overwhelmed by benefits (higher wages); but inelastic relationship of increase and changes in poverty
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direction: -1
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significance: 2
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notes:
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annotation: |
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A study on the impact of subsequent minimum wage floor introductions on poverty and income inequality in Brazil.
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It finds that in the short-term (3 months) wage floor increases reduced poverty by 2.8% and reduced income inequality by 2.4%.
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Over the longer-term these impacts decrease, and the minimum wage increases only show diminishing returns when the legal minimum is already high in relation to median earnings.
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It suggests that additional unemployment costs, created through new job losses through the introduction, are offset by the increased benefits --- the higher wages for workers.
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The authors also suggest an inelastic relationship between increases and poverty incidence.
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One limitation of the study is the limit of tracking individuals in the underlying data which can not account for people moving household to new locations.
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The data can only track individual dwellings --- instead of the households and inhabitants within --- and thus resembles repeated cross-sectional data more than actual panel data.
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