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City Minimum Wages and Spatial Equilibrium Effects

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  • Perez Perez, Jorge

Abstract

This paper studies the effect of minimum wage changes on spatial equilibriums in local labor markets. Using data for the U.S. and minimum wage variation across state borders, I analyze how commuting, residence, and employment locations change in response to local minimum wage changes. I find that areas where the minimum wage increases receive fewer low-wage commuters. I formulate a spatial equilibrium model and calculate counterfactuals with a higher minimum wage for U.S. cities considering an increase. For small minimum wage increases, most counties would receive higher low-wage commuting and have fewer low-wage residents. As minimum wage increases are larger, there are higher low-wage commuting reductions driven by employment relocation.

Suggested Citation

  • Perez Perez, Jorge, 2020. "City Minimum Wages and Spatial Equilibrium Effects," SocArXiv fpx9e_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:fpx9e_v1
    DOI: 10.31219/osf.io/fpx9e_v1
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