The Effects of the Minimum Wage in Brazil on the Distribution of Family Incomes: 1996-2001

The Brazilian economy has long relied on the minimum wage, having first implemented a minimum in 1940. Shortly after taking office in 2003, Brazil’s President raised the minimum wage by 20 percent and promised to double the value of the minimum wage before his term ends in 2006. The usual rationale for minimum wage increases is to bring about beneficial changes in the income distribution, by raising incomes of poor and low-income families. The goal of this paper is to evaluate the efficacy of the minimum wage in Brazil in bringing about these changes in the income distribution. We examine data drawn from Brazil’s major metropolitan areas, studying the years after Brazil’s hyper-inflation ended. The estimates provide no evidence that minimum wages in Brazil lift family incomes at the lower points of the income distribution; if anything some of the evidence points to adverse effects on lower-income families.

Pending issues in protection, productivity growth, and poverty reduction

This paper selectively synthesizes much of the research on Latin American and Caribbean labor markets in recent years. Several themes emerge that are particularly relevant to ongoing policy dialogues. First, labor legislation matters, but markets may be less segmented than previously thought. The impetus to voluntary informality, which appears to be a substantial fraction of the sector, implies that the design of social safety nets and labor legislation needs to take a more integrated view of the labor market, taking into account the cost-benefit analysis workers and firms make about whether to interact with formal institutions. Second, the impact of labor market institutions on productivity growth has probably been underemphasized. Draconian firing restrictions increase litigation and uncertainty surrounding worker separations, reduce turnover and job creation, and poorly protect workers. But theory and anecdotal evidence also suggest that they, and other related state or union induced rigidities, may have an even greater disincentive effect on technological adoption, which accounts for half of economic growth. Finally, institutions can affect poverty and equity, although the effects seem generally small and channels are not always clear. Overall, the present constellation of labor regulations serves workers and firms poorly and both could benefit from substantial reform.Labor Markets,Labor Standards,Economic Theory&Research,Work&Working Conditions,Labor Management and Relations

Essays on Strategic Behavior with Information Goods

This dissertation contains two chapters of my research. Chapter 2 studies whether prices aggregate private information in large competitive markets. To demonstrate the existence of fully revealing equilibrium prices, the literature on common-value auctions typically assumes that the information structure satisfies a strong ordering, the so-called monotone likelihood ratio property. This assumption rules out a large number of market situations - for instance, when signals come from different sources, and thus, the signals are multidimensional. This paper provides necessary and sufficient conditions for the existence of equilibria that fully aggregate information. These conditions are an ordering on the information structure, although sufficiently weak to allow for multidimensional signals to fit naturally. In addition, the paper shows that informative equilibria exist generically whenever signals are at least as numerous as values. On the other end, when signals are scarce, relative to the values, the reverse result holds. In a context where the object has multiple characteristics and signals are specialized to specific characteristics, informative equilibria are generic as long as signals are sufficiently rich for each characteristic. Chapter 3 extends the Crawford and Sobel (1982) (CS) cheap talk model, by allowing for the possibility that the message sent by the informed expert never arrives to the decision maker. This feature introduces a novel strategic consideration because when a message does not arrive, the receiver does not know whether the message was sent and lost, or not sent at all. The paper studies equilibria under quadratic preferences. In contrast to Blume et al. (2007), equilibria continue to have the partition structure of CS when there are finitely many ways in which messages can be misinterpreted. Furthermore, this mechanism achieves the upper bound on efficiency as in the mediated mechanism by Goltsman et al. (2008

On the nature of micro-entrepreneurship: evidence from Argentina

We analyse the nature of micro-entrepreneurship in Argentina. We focus on whether the sector resembles its counterpart in industrialized countries, characterized by the risk-taking nature of the entrepreneurial activity, or if it is the result of labour market distortions and disguised unemployment, as in the dual economy hypothesis. Our results suggest a segmentation of the micro-entrepreneur sector. Both young uneducated and middle aged highly educated salaried workers have the highest likelihood of becoming entrepreneurs. However, the first segment has a high probability of becoming own-account workers, while the probability of becoming micro-entrepreneurs with employees is strictly increasing in both age and education. Moreover, the probability of entrepreneur failure (as measured by the transition to the salaried sector) has an inverted U shape, implying that both high and low skill individuals are more likely to remain entrepreneurs.

The effects of U.S. monetary policy shocks on mutual fund investing

We study the effects of unexpected changes in the stance of U.S. monetary policy on the performance and flows of mutual funds investing in domestic and international financial markets over the recent period of unconventional monetary policy. Taking an agnostic approach on the transmission mechanism of monetary policy, we find that monetary policy shocks have a direct effect on fund performance and flow dynamics, and that the effect of these surprises differs by investment strategy. Results show that an unexpected tightening of the stance of policy is associated with negative performance and outflows from fixed-income funds, in particular those investing in international, government and investment grade bond markets. Results also point to a negative relationship between equity fund performance and policy tightening. Moreover, our findings indicate that Federal Reserve’s expansionary balance sheet policy (i.e. large-scale asset purchases) has a strong positive effect on the performance and flows of equity funds, especially on those investing in emerging markets

Mean and quantile regression Oaxaca-Blinder decompositions with an application to caste discrimination

This paper extends the Oaxaca-Blinder decomposition method to the quantile regression random-coefficients framework. Mean-based decompositions are obtained as the integration of the quantile regression decomposition process. This method allows identifying if the observed differences between two groups differ across quantiles, and if so, what is the contribution to the mean-based Oaxaca-Blinder decomposition. The proposed methodology is applied to the analysis of caste discrimination in Nepal. The results indicate that much of the discrimination occurs at the lowest quantiles, which implies that disadvantaged groups are the ones who suffer the most caste discrimination.Fil: Montes Rojas, Gabriel Victorio. Consejo Nacional de Investigaciones Científicas y Técnicas. Oficina de Coordinación Administrativa Saavedra 15. Instituto Interdisciplinario de Economía Política de Buenos Aires. Universidad de Buenos Aires. Facultad de Ciencias Económicas. Instituto Interdisciplinario de Economía Política de Buenos Aires; Argentina. Universidad de Barcelona; EspañaFil: Siga, Lucas. New York University; Emiratos Árabes UnidosFil: Mainali, Ram. Ministry of Finance; Nepa