Non-employment duration and subsequent wage losses in the Brazilian labour market

This paper analyses the relationship between unemployment and its respective duration on subsequent salary. Despite of being a topic of intense debate in the labour market literature, there is little empirical evidence to support this perspective in the Brazilian labour market. Drawing on data from...

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Bibliographic Details
Published inIDEAS Working Paper Series from RePEc
Main Authors Hilton Martins de Brito Ramalho, Ignácio Tavares de Araújo Júnior, Paulo Aguiar do Monte
Format Paper
LanguageEnglish
Published St. Louis Federal Reserve Bank of St. Louis 01.01.2011
Subjects
Labor market
Wages & salaries
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Summary:This paper analyses the relationship between unemployment and its respective duration on subsequent salary. Despite of being a topic of intense debate in the labour market literature, there is little empirical evidence to support this perspective in the Brazilian labour market. Drawing on data from the Monthly Employment Survey (2008, 2009) and following the methodology proposed by Tunali (1986), plus an analysis of wage differential, the findings go in the same direction of earlier studies (e.g. Keltzer, 1998; Burda and Mertens, 2001; Arulampalam 2001; Arranz et al., 2010) by highlighting that unemployment duration generates a cost to employees represented in a subsequent wage loss. In other words, it seems that workers who have recently experienced unemployment spell have disadvantages in terms of wages compared to those who remained employed throughout the period under inquiry.