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Aaronson, Daniel,
Sumit Agarwal, and
Eric French. 2012. "The Spending and Debt Response to Minimum Wage Hikes."
,
102(7): 3111-39.
Show Article Details
DOI: 10.1257/aer.102.7.3111
Abstract:Immediately following a minimum wage hike, household income
rises on average by about $250 per quarter and spending by roughly
$700 per quarter for households with minimum wage workers. Most
of the spending response is caused by a small number of households
who purchase vehicles. Furthermore, we find that the high spending
levels are financed through increases in collateralized debt. Our
results are consistent with a model where households can borrow
against durables and face costs of adjusting their durables stock.
(JEL D12, D14, D91, J38)
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Authors:
Aaronson, Daniel (Federal Reserve Bank of Chicago)
Agarwal, Sumit (National U Singapore)
French, Eric (Federal Reserve Bank of Chicago)
JEL Classifications:
D12: Consumer Economics: Empirical Analysis
D14: Personal Finance
D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
J38: Wages, Compensation, and Labor Costs: Public Policy
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