Minimum wage and wage inequality: a study with counterfactual densities in the Brazilian metropolitan regions

Abstract

In the 2000s the Brazilian labor market had several changes in parallel to rapid growth of the real minimum wage and the expansion of the formal sector. We aim to evaluate the importance of these two factors, the changing conditions of supply and demand and the characteristics of the workforce on wage distribution between 2004 and 2014. Our results indicate that the minimum wage contributed to reduce wage dispersion, especially among women and in the lowest stratum of the distribution. Among those with higher income, the main factor to reduce the dispersion were the conditions of supply and demand.