Answer Happy

Between 1996 and 2012, the real minimum wage in Brazil increased
by 119%. This drastic policy change has inspired a lot of economic
research in the field of public finance and policy. In particular,
economists found that over this same time interval, earnings
inequality (the variance of log earnings among Brazilian workers)
of prime age males declined by about 50% from .75 to .50 (as shown
in the figure on the next page). From examining this figure, can we
say that raising the minimum wage in Brazil caused earnings
inequality to fall? Discuss.
Earnings inequality and real minimum wage in Brazil, 1988-2012 .8 650 Variance of log earnings 600 .75 550 .7 500 .65 450 Variance of log earnings Real minimum wage (2012 Reais) 400 .6 Real minimum wage 350 55 300 .5 250 45 200 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012