Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/161832
Authors: 
Engbom, Niklas
Moser, Christian
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6393
Abstract: 
We quantify the effect of a minimum wage on compression throughout the earnings distribution. Using the case of Brazil, which experienced a large decrease in earnings inequality while its real minimum wage increased from 1996-2012, we document that the inequality decrease was bottom-driven yet widespread, with compression up to the 75th earnings percentile. We develop an equilibrium search model with heterogeneous firms and workers and find that effects of the minimum wage are consistent with the above facts, explaining 70 percent of the observed inequality decrease, with half of the decrease due to spillovers further up the earnings distribution.
Subjects: 
worker and firm heterogeneity
minimum wage
matched employer-employee data
equilibrium search model
JEL: 
E24
E61
J31
Document Type: 
Working Paper

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