The Impact of the Minimum Wage on Unemployment, Informality, and Inactivity in Brazil from 2012 to 2015

Abstract

This study investigates whether real minimum wage adjustments between 2012 and 2015 affected unemployment, informality, and labor force inactivity rates in Brazil. To that end, panel data models were estimated using microdata from the Continuous National Household Sample Survey (PNADC - Pesquisa Nacional por Amostra de Domicílios Contínua). Contrary to expectations, the results show that real increases in the minimum wage were associated with a reduction in the informality rate. Regarding unemployment, the findings suggest that higher real minimum wages tended to raise unemployment rates for both men and women. Additionally, minimum wage increases contributed to a decline in female labor force participation.