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Federal Reserve Bank of Boston
Working Papers
The local aggregate effects of minimum wage increases
Daniel H. Cooper
Maria Jose Luengo-Prado
Jonathan A. Parker
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.


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Daniel H. Cooper & Maria Jose Luengo-Prado & Jonathan A. Parker, The local aggregate effects of minimum wage increases, Federal Reserve Bank of Boston, Working Papers 17-8, 01 Aug 2017.
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Keywords: minimum wage increases; prices; consumption; local aggregate effects
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