Wage Indexation and Money Wages in Brazilian Manufacturing: 1964-1978 (Labor Relations, Unions, Authoritarian, Economic Policy, Wage Drift)
Smith, Russell Edward
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Permalink
https://hdl.handle.net/2142/70770
Description
Title
Wage Indexation and Money Wages in Brazilian Manufacturing: 1964-1978 (Labor Relations, Unions, Authoritarian, Economic Policy, Wage Drift)
Author(s)
Smith, Russell Edward
Issue Date
1985
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Labor
Abstract
This is a study of the role of the wage and labor policies in the determination of the wages of manufacturing workers in Sao Paulo, Brazil, under the military governments from 1964 to 1978. It is motivated by the worsening of the position of urban workers in the income distribution between 1960 and 1970.
Chapter I presents the political and economic events of the 1960s and 1970s, as well as an historical background to the period. Chapter II analyzes the Brazilian industrial relations structure and focuses on issues relevant to wage determination, including the state-sponsored system of unions, the effective prohibition on strikes, the absence of a job security system, the interaction between the individual and collective labor contracts, and forced turnover rotatividade policies by the employers.
Chapter III discusses the government's collective wage adjustment and minimum wage policies in the context of the inflationary economic environment, the Brazilian indexation system, and wage indexation systems in the Western industrial countries. It considers the impact on wages of technical aspects in the construction of a wage indexation system, including the choice of data and the manipulation of price indexes, and also the practical problems of empirical research in an inflationary economic environment.
Chapter IV reviews the literature on income distribution, wage determination, and wage policy in Brazil, focusing on the use of information from the wage policies as "proxies," "benchmarks," and explanatory variables in the analysis of wage movements. Chapter V is an empirical study of long-run wage drift and changes in wage differentials in Sao Paulo manufacturing by industry, size of firm, and Brazilian versus multinational firms. Chapter VI measures the short-run impact elasticity of the two wage policies on wage changes using a monthly-data regression model.
It is concluded the wage policies had limited impact on workers' wages relative to market forces after the 1965-1967 "wage squeeze" period because of the low real value of the minimum wage and the active labor markets as evidenced by high rates of job changing in the case of the collective wage adjustment. It is believed, however, that the set of labor and wage policies together contributed to the decline in wages and worsening of income distribution and set the stage for the continued worsening after the mid-1960s through unrestrained market activity.
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