Appendix—Regressions and General Equilibrium Model
Arnold, Jens M., and João Jalles, 2014, “Dividing the Pie in Brazil: Income Distribution, Social Policies, and the New Middle Class,” OECD Working Paper No. 1105 (Paris: Organisation for Economic Co-operation and Development).
Allegretto, Sylvia A., Arindrajit Dube, and Michael Reich, 2011, “Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data,” Industrial Relations, Vol. 50, No. 2 (April), pp. 205–40.
Card, David, and Alan B. Krueger, 1994, “Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania,” American Economic Review, Vol. 84(4) (September), pp. 772–93.
Card, David, and Alan B. Krueger, 1998, “A Re-Analysis of the Effect of the New Jersey Minimum Wage Increase in the Fast-Food Industry with Representative Payroll Data,” NBER Working Paper No. 6386 (Cambridge, Massachusetts: National Bureau of Economic Research).
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)| false Card, David, and Alan B. Krueger, 1998, “ A Re-Analysis of the Effect of the New Jersey Minimum Wage Increase in the Fast-Food Industry with Representative Payroll Data,” NBER Working Paper No. 6386 ( Cambridge, Massachusetts: National Bureau of Economic Research).
Dolton, Peter, and Chiara Rosazza Bondibene, 2012, “The International Experience of Minimum Wages in an Economic Downturn,” Economic Policy, Vol. 27, Issue 69, pp. 99–142.
Dube, Arindrajit, T. William Lester, and Michael Reich, 2010, “Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties,” Review of Economics and Statistics, Vol. 92, No. 4 (November), pp. 945–64.
Maurizio, Roxana, 2014, “El Impacto Distributive del Salario Minimo en la Argentina, el Brasil, Chile y el Uruguay,” CEPAL, Serie Politicas Sociales, No. 194 (LC/L 3825).
Neumark, David and William Wascher, 1997, “The New Jersey-Pennsylvania Minimum Wage Experiment: A Re-Evaluation Using Payroll Records,” mimeo, Michigan State University.
Neumark, David, Wendy Cunningham, and Lucas Siga, 2006, “The Effects of the Minimum Wage in Brazil on the Distribution of Family Incomes: 1996–2001,” Journal of Development Economics, Issue 80, pp. 136–159.
Neumark, David, Ian J.M. Salas, and William Wascher, 2013, “Revisiting the Minimum Wage-Employment Debate: Throwing out the Baby with the Bathwater?” NBER Working Paper No. 18681, (Cambridge, Massachusetts: National Bureau of Economic Research).
Prepared by Fabian Lipinsky and Carlos Goes.
For example, similar to Dolton and Bondibene (2012), further control variables could be included. Another robustness check would be to test for level effects.
In fact, the LAC6 average is above the OECD average, owing to high Minimum Wage-GDP ratios for Argentina, Colombia and Peru.
For a literature review of the impact of changes in the minimum wage on employment, including in Brazil, see Neumark and Wascher (2007).
Dolten and Bondibene 2012.
This specification includes a version of the panel in which the variables would be measured in deviations from the steady state, denoted by a star:
Dolten and Bondibene (2012) reports elasticities of about -0.05 for adult and -0.2 for youth employment.
Specifically, the figure displays the percentage difference in cumulative change of each variable over 10 quarters following each shock.
While the magnitude of the elasticities depends on the calibration of the general equilibrium model, the qualitative direction of the results is very robust and insensitive to changes in the calibration.
The other parameters are close to standard values in the DSGE literature.
An interesting extension could be to replace lump-sum taxes with taxes on labor (that are progressive with earnings) capital and consumption.