The commitment of the minimum wage to the basic food basket in Brazil: Evolution and regional asymmetries

Abstract

This study assesses regional disparities in Brazil from 2000 to 2023 regarding the commitment of the national minimum wage (MW) to the basic food basket (BFB), aiming to discuss the MW’s effectiveness in upholding constitutional rights. A log-log regression model was used, with BFB commitment as the dependent variable, and MW and the National Consumer Price Index (INPC) as independent variables. The results show a decreasing commitment over time across all regions, though still high, averaging around 50%. In the Northeast, this percentage is lower, highlighting regional inequalities. A 1% increase in MW reduces the commitment by 0.34% (2SLS) and 0.5% (OLS), with the North seeing the largest reduction and the Northeast the smallest. Additionally, a 4% MW adjustment has a small, uneven impact on the BFB commitment across regions. Thus, policy adjustments should consider regional asymmetries and socioeconomic vulnerabilities, focusing on areas with a higher concentration of low-income workers.