DISTRIBUTIVE EFFECTS OF MINIMUM WAGE IN THE LABOR MARKET OF NORTHEAST REGION

ABSTRACT

This paper investigates the impact of the minimum wage (MW) on the distribution ofearnings in the labor market of the Northeast Region of Brazil in the 2002-2012 period. The analysis was based on the simulation methodology proposed by DiNardo, Fortin and Lemieux (1996) that estimate counter factual Kernel density functions, and used the microdata provided by the National Sample Survey (PNAD) of the Brazilian Institute of Geography and Statistics (IBGE). Sample data covered a population of females and males. The results revealed that the minimum wage, the degree of formalization in labor relations, and the set of individual attributes had a positive impact on the distribution of earnings among both female and male workers. However, for men, the de-concentrating effect of the minimum wage is more intense compared to women. In summary, the results suggest that the minimum wage has been important to reduce the dispersion of labor income in recent years.

KEYWORDS:
concentration of income; minimum wage; labor market