Minimum wage effects in a developing country

The available empirical minimum wage literature, which is mostly based on US evidence, is not very useful for analyzing developing countries, where the minimum wage affects many more workers and labour institutions and law enforcement differ in important ways. The main contribution of this paper is to present new empirical evidence on minimum wage effects for a large developing country, Brazil. Using a monthly household survey panel from 1982 to 2004 I find evidence of a wage compression effect for both the formal and informal sectors. Furthermore, I find no evidence of employment effects in either sector.