Fynsa
It may seem that I am joining the fashionable topic and that everything that needs to be said has already been said, but it seems to me that the discussion on unemployment deserves a little more technical precision. Unfortunately, the work done by the Central Bank on the impact of the rapid and significant increase in the minimum wage has become politicized, turning into a dichotomous debate that omits the motivation, methodology and conclusions of the study itself.
In the first place, the motivation of the study is to understand the effects on the labor market of the minimum wage increase, both in terms of jobs and wages, in order to analyze the impact on company costs, the reduction of margins and the consequent potential inflationary impact. It is not an evaluation of public policy.
Second, using micro data, we measure the changes reported by companies that pay minimum wages, but also those that pay around the minimum wage. The period in which the increase in question occurred is considered, no more, no less. It is an analysis of the particular case, which meets the conditions mentioned above (significant increase in a short period) and not a calculation that allows forecasting the effects on the labor market of any other variation in the minimum wage. As economists say to these things, it is not a generalized elasticity calculation.
Finally, the conclusions show that the negative impact on employment more than offset the positive effect of the measure on wages. In public policy, there are winners and losers, there are no free things. The policy maker has to weigh the benefits and costs and make decisions. Then, the evaluation of that is a normative, subjective, political discussion or whatever you want to call it, and democracies decide which judgment we like best at the ballot box. The work published by the Central is an input to the discussion, but it is not the conclusion in itself.
In fact, unfortunately, the discussion on unemployment has only recently become relevant, but it is something we have been working on and raising alarms about for some time now, especially because we do not believe that the unemployment we see today is unicausal. Unfortunately, although we see room for job creation, especially if the cyclical condition of the economy improves, there are others that cannot be recovered because they are due to structural changes. Sorry, rephrasing: they are not recoverable as we knew them, in the form, sector and category in which they performed. We will go deeper into this in a future column, stay tuned.
