Minimum Wage, “Lighthouse Effect” and Poverty

Vol. 21 No. 2 (2001)

Apr-Jun / 2001
Published April 1, 2001
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Neri, Marcelo, Gustavo Gonzaga, and José Márcio Camargo. 2001. “Minimum Wage, ‘Lighthouse Effect’ and Poverty”. Brazilian Journal of Political Economy 21 (2):263-76. https://doi.org/10.1590/0101-31572001-1264.
ACM ACS APA ABNT Chicago Harvard IEEE MLA Turabian Vancouver

Download Citation

Endnote/Zotero/Mendeley (RIS) BibTeX

Minimum Wage, “Lighthouse Effect” and Poverty

Marcelo Neri
Professor da Escola Brasileira de Economia e Finanças da Fundação Getúlio Vargas – EPGE/FGV, Rio de Janeiro/RJ, Brasil.
Gustavo Gonzaga
Pontifícia Universidade Católica do Rio de Janeiro – PUC-Rio, Rio de Janeiro/RJ, Brasil.
José Márcio Camargo
Pontifícia Universidade Católica do Rio de Janeiro – PUC-Rio, Rio de Janeiro/RJ, Brasil.
Brazilian Journal of Political Economy, Vol. 21 No. 2 (2001), Apr-Jun / 2001, Pages 263-276

Abstract

This paper evaluates the effectiveness of the minimum wage policy in various segments of Brazilian labor markets. Our basic technique is to quantify corner solutions imposed by the minimum wage. These points are later used as a focalization mechanism in the simulation of upper bounds of the effects of the minimum wage on poverty measures. We highlight the importance of two unusual effects of the minimum wage, i) The high percentage of informal employees receiving exactly one minimum wage, this enhances the effects of the minimum on poverty, and ii) The use of the minimum wage as a numeraire in wage determination, in particular within the formal sector.

JEL Classification: J31; J38.


Keywords: Minimum wage inequality poverty