Distributional Effects of Local Minimum Wages: A Spatial Job Search Approach

Weilong Zhang and Petra E. Todd

Journal of Labor Economics, 2025, vol. 43, issue S1, S221 - S267

Abstract: This paper develops a spatial general equilibrium job search model to study the effects of local and universal minimum wage policies on employment, wages, job postings, vacancies, migration, and welfare. Workers search for jobs locally and in neighboring areas, deciding whether to migrate or commute after receiving remote offers. The model, estimated using ACS and QWI data, reliably forecasts commuting responses to city minimum wage hikes. Simulations show that low-skill (noncollege) workers benefit from local wage increases up to $12.50. The greatest per capita welfare gain for all workers is achieved by a $15.25 universal minimum wage.

Date: 2025
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