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City Minimum Wages and Spatial Equilibrium Effects

Jorge Pérez Pérez ()

No 2022-04, Working Papers from Banco de México

Abstract: This paper studies the effect of minimum wage changes on spatial equilibriums in local labor markets. Using data for the U.S. and minimum wage variation across state borders, I analyze how commuting, residence, and employment locations change in response to local minimum wage changes. I find that areas where the minimum wage increases receive fewer low-wage commuters. I formulate a spatial equilibrium model and calculate counterfactuals with a higher minimum wage for U.S. cities considering an increase. For small minimum wage increases, most counties would receive higher low-wage commuting and have fewer low-wage residents. As minimum wage increases are larger, there are higher low-wage commuting reductions driven by employment relocation.

Keywords: Minimum wage; spatial equilibrium; local labor markets (search for similar items in EconPapers)
JEL-codes: J31 J38 R23 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-geo, nep-lma and nep-ure
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Working Paper: City Minimum Wages and Spatial Equilibrium Effects (2020) Downloads
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