The local aggregate effects of minimum wage increases

RePEc Short ID: plu36
ORCID iD: 0000-0002-1994-2925

Cooper, Daniel H.; Luengo-Prado, Maria Jose; Parker, Jonathan A.

Working Paper

The local aggregate effects of minimum wage increases

Abstract: This paper examines the effect of minimum wage changes on local aggregate inflation and consumption growth. The paper utilizes variation in state-level minimum wages across locations and finds that minimum wage increases have a relatively modest effect on both city-level inflation and spending growth over the years following the change. The most noticeable effects are for food consumed at home and away from home?industries that typically employ a large share of low-wage and minimum-wage workers. Interestingly, consumers adjust their real food consumption when minimum wages rise, suggesting that some workers benefit from minimum wage changes.

Keywords: minimum wage increases; prices; consumption; local aggregate effects;

JEL Classification: E21; E31; E64;