Journal
AMERICAN ECONOMIC REVIEW
Volume 102, Issue 7, Pages 3111-3139Publisher
AMER ECONOMIC ASSOC
DOI: 10.1257/aer.102.7.3111
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Funding
- ESRC [ES/H021221/1] Funding Source: UKRI
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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.
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