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

Cristian Alonso

Journal of Human Resources, 2022, vol. 57, issue 5, 1690-1714

Abstract: How effective is the minimum wage at raising nondurable household consumption through the redistribution of income towards low-wage workers? To address this question, I use novel data on retail sales by county and exploit variation in the minimum wage rate across the United States and over time. I find that a 10 percent increase in the minimum wage raises sales by 0.6 percent in nominal terms and 0.4 percent in real terms. These large effects are suggestive of high marginal propensities to spend on nondurables out of minimum wage hikes. The expenditure response emerges even when exploiting only within-state variation.

JEL-codes: D31 E21 E64 J20 J38 (search for similar items in EconPapers)
Date: 2022
Note: DOI: 10.3368/jhr.58.1.0518-9524R2
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:57:y:2022:i:5:p:1690-1714

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