The Local Aggregate Effects of Minimum Wage Increases

61 Pages Posted: 24 Apr 2019 Last revised: 23 May 2021

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.

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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