The Local Aggregate Effects of Minimum Wage Increases

61 Pages Posted: 24 Apr 2019

See all articles by Daniel Cooper

Daniel Cooper

Federal Reserve Bank of Boston

María José Luengo‐Prado

Federal Reserve Banks - Federal Reserve Bank of Boston

Jonathan A. Parker

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

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Date Written: April 2019

Abstract

Using variation in minimum wages across cities and controlling for differences in business-cycle factors and long-run local economic trends, we find that following minimum wage increases, both prices and nominal spending rise modestly. These gains are larger for certain sub-categories of goods such as food away from home and in locations where low-wage workers are a larger share of employment. Further, minimum wage increases are associated with reduced total debt among households with low credit scores, higher auto debt, and increased access to credit.

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Suggested Citation

Cooper, Daniel H. and Luengo-Prado, Maria Jose and Parker, Jonathan A., The Local Aggregate Effects of Minimum Wage Increases (April 2019). NBER Working Paper No. w25761. Available at SSRN: https://ssrn.com/abstract=3377057

Daniel H. Cooper (Contact Author)

Federal Reserve Bank of Boston ( email )

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Maria Jose Luengo-Prado

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Jonathan A. Parker

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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Cambridge, MA
United States
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National Bureau of Economic Research (NBER)

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