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Research ArticleArticle

Beyond Labor Market Outcomes

The Impact of the Minimum Wage on Nondurable Consumption

Cristian Alonso
Published online before print July 09, 2020, 0518-9524R2; DOI: https://doi.org/10.3368/jhr.58.1.0518-9524R2
Cristian Alonso
Cristian Alonso was a student at Princeton University when this research project was conducted.
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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 U.S. 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 Classification
  • J38
  • J20
  • D31
  • E21
  • E64

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Journal of Human Resources: 58 (3)
Journal of Human Resources
Vol. 58, Issue 3
1 May 2023
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Beyond Labor Market Outcomes
Cristian Alonso
Journal of Human Resources Jul 2020, 0518-9524R2; DOI: 10.3368/jhr.58.1.0518-9524R2

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Beyond Labor Market Outcomes
Cristian Alonso
Journal of Human Resources Jul 2020, 0518-9524R2; DOI: 10.3368/jhr.58.1.0518-9524R2
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Keywords

  • J38
  • J20
  • D31
  • E21
  • E64
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