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dc.contributor.authorLemos, Saraen_US
dc.description.abstractThere is very little empirical evidence on the effects of the minimum wage on prices in theinternational literature and none whatsoever for developing countries. This paper estimatesthe minimum wage price effect using monthly Brazilian household and firm data from 1982 to2000 aggregated at a regional level. Empirical evidence on price effects will help to answerthe question of who pays for the higher costs: firms, consumers or the unemployed. Theanswer to this question is a contribution to the controversial recent debate in the literatureover the direction of the minimum wage employment effect. Employment might not beaffected if firms are able to pass through to prices the higher labour costs associated to aminimum wage increase. In that case, consumers pay for the increase. Furthermore, if thepoor consumers are those buying minimum wage labour intensive goods, or if these goodsrepresent a large proportion of their consumption bundle, then minimum wage increasesmight hurt rather than aid the poor. Moreover, if minimum wage increases cause inflation,they will hurt the poor further, who disproportionately suffer from it. Robust results indicatethat the minimum wage raises overall prices in Brazil. The resulting inflation is slightly higherfor the poor than for the rich in the long run, smaller in low inflation periods, and larger inpoorer regions.en_US
dc.publisher|aInstitute for the Study of Labor (IZA) |cBonnen_US
dc.relation.ispartofseries|aIZA Discussion paper series |x1071en_US
dc.subject.keywordminimum wageen_US
dc.subject.keywordwage effecten_US
dc.subject.keywordemployment effecten_US
dc.subject.keywordprice effecten_US
dc.subject.keywordcost shocken_US
dc.titleThe Effect of the Minimum Wage on Prices in Brazilen_US
dc.typeWorking Paperen_US

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