To examine the effects of minimum wages on the distribution of family incomes in Brazil, we
examine data drawn from Brazil’s major metropolitan areas. We study the years 1996-2001, after
Brazil’s hyper-inflation ended, when the period of very frequent minimum wage changes ended, and
during which the relative price differentials set by a minimum wage should have been much more
apparent and persistent. We use a research design that identifies the effects of minimum wages from both
cross-sectional and time-series variation in the extent to which the minimum wage was binding, with the
time-series variation driven by legislated increases, and the cross-sectional variation driven by differences
in wage levels across metropolitan areas affected by identical nominal minimum wage increases.
We look at evidence on both the effects of minimum wages on the distribution of family incomes,
about which there are no firm predictions, and at evidence on the effects of minimum wages on outcomes
for which there are firm predictions. Turning to the latter first, we find that minimum wages that are
binding for many low-wage workers push up wages at the bottom of the wage distribution. But for
higher-wage workers there is no impact of minimum wages on wages. We also find some evidence that
minimum wages reduce employment. These results serve in part to validate the approach taken in the
distributional analysis, and in part to verify that the data are informative above the effects of minimum
wages.