The purpose of this study is to examine whether the minimum wage in Brazil has beneficial
effects on the distribution of family incomes, in particular raising incomes of low-income families. While
such distributional effects are the most common rationale for minimum wages, economic theory makes noprediction that they will occur. Minimum wages are predicted to reduce employment, and research for
both Brazil and the United States tends to confirm this prediction. But all this implies is that minimum
wages will harm some workers while benefiting others. The distributional effects depend on the
magnitudes of the gains and losses, and where they occur in the income distribution–a purely empirical
question. Research for the United States finds no gains to low-income families from minimum wage
increases, and if anything increases in poverty. However, in Brazil, because the income distribution is
very different, with more inequality generally and a greater number of heads of household earning a wage
at or near the minimum, the distributional effects of minimum wages with regard to family income may
be quite different.