Beyond Labor Market Outcomes: The Impact of the Minimum Wage on Nondurable Consumption

48 Pages Posted: 6 Aug 2016

See all articles by Cristian Alonso

Cristian Alonso

Princeton University, Department of Economics, Students

Date Written: June 30, 2016

Abstract

How eff ective is the minimum wage at raising nondurable household consumption through the redistribution of income towards poor workers? Using novel data on retail sales by county, I exploit variation in the minimum wage rates across states and over time to answer this question. I find that a 10% increase in the minimum wage increases sales by 1.1%. I argue that such a large eff ect is explained by positive spillovers benefi ting the bottom quarter of the labor income distribution. As expected, the expenditure response to minimum wage hikes is stronger in counties where the policy is more binding.

Keywords: Minimum Wage, Nondurable Consumption, Retail Sales

JEL Classification: J38, J20, D31, E21, E64

Suggested Citation

Alonso, Cristian, Beyond Labor Market Outcomes: The Impact of the Minimum Wage on Nondurable Consumption (June 30, 2016). Available at SSRN: https://ssrn.com/abstract=2818623 or http://dx.doi.org/10.2139/ssrn.2818623

Cristian Alonso (Contact Author)

Princeton University, Department of Economics, Students ( email )

Princeton, NJ
United States

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