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Labor Market and Income Distribution in the Economic Slowdown and Crisis of the Period 2012/2016 – Minimum Wage versus GDP

Type of the publication: 

This study deals with the evolution of the Brazilian labor market and the distribution of labor income in the recent period of slowdown and economic crisis. During the period analyzed there were significant changes in the labor market with an increase of unemployment and labor informality. Despite the deterioration of the labor market in recent years, especially in 2015 and 2016, inequality indicators showed a different trend, with continued deconcentration of income and subsequent stabilization until the end of the period. The econometric analysis showed that these results are associated not only with the behavior of the economy but also with the policy of increasing the minimum wage, which maintained the income gains of the lower tenths of the income distribution at higher levels than the ones observed for the higher tenths. Thus, the dynamics of the Brazilian labor market revealed the importance of public policies to guarantee the living conditions of unemployed workers. For those who remain employed, the object of the present study, policies such as increasing the minimum wage fulfill the function of minimizing the losses in income caused by the crisis.

 

Image: ©IRD - Haeringer, Philippe