Brazil’s Plano Brasil Maior: Jobs or Profits?

Overview

Brazil’s Plano Brasil Maior replaced a 20% payroll contribution with a 1–2% gross-revenue contribution for selected standard-regime sectors from 2011 to 2014. Formal employment rose about 5%, with stronger responses in less-concentrated local labor markets; measured new-hire wages changed little, while a structural estimate indicates higher profits. The series follows the event-study evidence, firm growth, observed entry, tax-regime switching, possible formalization, and fiscal cost. It treats this preliminary selected-sector case as a conditional policy lesson, not a universal multiplier.

Learning outcomes

The PBM was associated with about 5% higher formal employment in selected sectors during the studied period.
Hiring gains appeared mainly in less-concentrated local labor markets, while HHI remains only a proxy for employer power.
Contractual new-hire wages changed little, while a structural estimate implies a 106% average profit increase.
The formal-employment increase reflects incumbent growth and observed entry, with tax switching and formalization making its net-job share uncertain.
The reported cost was about US$17,055 per formal job, but it is a back-of-the-envelope comparison, not full welfare analysis.

Keywords

Plano Brasil MaiorPayroll taxEmploymentOligopsonyHHIWagesProfitsFormalizationRAIS

Chapters

Brazil’s PBM: More Jobs, Flat Wages

How local labor markets split hiring from profit retention

9 min · How local labor markets split hiring from profit retention

9 min

Brazil’s PBM: Eligibility and Event Study

Who was covered and how timing supports the comparison

9 min · Who was covered and how timing supports the comparison

9 min

Brazil’s PBM: Hiring Without Measured Wage Growth

How timing and tax intensity test the labor-cost channel

9 min · How timing and tax intensity test the labor-cost channel

9 min

Brazil’s PBM: Where Formal Employment Came From

How growth, entry, and formalization shape the measured increase

11 min · How growth, entry, and formalization shape the measured increase

11 min

Brazil’s PBM: Local Competition and Hiring

How employer concentration changes tax relief’s payoff

9 min · How employer concentration changes tax relief’s payoff

9 min

Brazil’s PBM: When Relief Becomes Jobs or Profits

How to judge hiring, formalization, firm support, and cost

10 min · How to judge hiring, formalization, firm support, and cost

10 min

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FAQ

Did Brazil’s Plano Brasil Maior create jobs?

It was associated with about 5% higher formal employment in selected sectors after implementation, but the preliminary event-study evidence is not a randomized experiment.

Why did the PBM create more jobs in some local markets than others?

The response was stronger in less-concentrated local labor markets, where employers faced more competition for workers. In more concentrated markets, firms could retain more relief as profit.

Did the PBM payroll-tax cut raise workers’ wages?

Not measurably in the study’s new-hire wage measure: contractual hourly wages changed little and insignificantly. That does not rule out changes in incumbent pay, benefits, hours, or other compensation.

Were all of the additional formal jobs newly created?

No, the evidence does not show that all additional formal jobs were newly created. The increase includes incumbent-firm growth and observed entry, while tax-regime switching and formalization make the exact net-job share uncertain.

How costly was the PBM per formal job?

The paper estimates about US$17,055 per formal job in 2018 prices, or roughly R$47,600 in 2014 prices. It presents this as a back-of-the-envelope comparison, not a full welfare calculation.