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Minimum wage increases and eviction risk

Sumit Agarwal, Brent Ambrose and Moussa Diop

Journal of Urban Economics, 2022, vol. 129, issue C

Abstract: We extend the debate on the benefits to increasing the minimum wage by examining the impact on expenses associated with shelter, a previously unexplored area. Our analysis uses a unique data set that tracks household rental payments. Increases in state minimum wages significantly reduce the incidence of renters defaulting on their lease contracts by 1.7 percentage points over three months, relative to similar renters who did not experience an increase in the minimum wage. This represents 10.6% fewer monthly defaults. However, this effect slowly decreases over time as landlords react to wage increases by increasing rents.

Keywords: Minimum wage increase; Lease default; Eviction risk; Rental market; Household income (search for similar items in EconPapers)
JEL-codes: G13 G18 G28 J3 R3 R31 R38 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.jue.2021.103421

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