Minimum Wages and Informality
 

Palestrante: Claire Montialoux

Instituição: Sciences-Po Paris Tipo do Seminário: Acadêmico

Data: 26/10/2026 - 16H - SEG – Este seminário será EXCLUSIVAMENTE PRESENCIAL.

Sala: 804 AB

Prof. Responsável: Lucas Finamor
 

Abstract:
How do minimum wages affect informality? We study the near-doubling of the real minimum wage from 2000 to 2009 in Brazil, where 46% of the workforce is informal. Using labor force surveys covering the informal sector, we show that the minimum wage increases wages for informal employees, with an effect about two-thirds the size of that on formal employees. Wage gains are especially pronounced in areas with greater enforcement capacity, among industries with a low share of informality, and for informal workers with a greater number of formal outside options. In light of these wage spillovers in the informal sector, reallocation away from formal employment is muted: a 10% gain in formal sector wages from the minimum wage translates to 2.8% of workers reallocated from formal to other forms of employment. Examining heterogeneity across workers, reallocation is smaller precisely where wage gains to informal workers are larger, a pattern that contrasts with many existing models of informality.