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Estimating the Minimum Wage’s Spillover Effect on Below Median Local Housing Rents

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  • Krieg Tidemann

    (Niagara University)

Abstract

This paper offers empirical evidence on minimum wage spillovers into rental housing markets. Minimum wage spillovers may arise from two channels shifting housing demand: migration or minimum wage impacts on low-wage worker real income. Reduced-form estimation and a pooled event study exploit state-by-year variation from 1985—2023 in effective minimum wages to estimate the minimum wage’s impact on below median housing rents and low-wage worker population shares. The empirical strategies rely on rent data from the United States Department of Housing and Urban Development’s Fair Market Rents series and American Community Survey population shares data from the United States Census Bureau. The minimum wage has an inconclusive effect on low-wage worker population shares while reducing rents. A $1 minimum wage increase reduces below-median monthly rents by 0.7 – 2 percentage points. In contrast to the limited existing evidence for the minimum wage raising local housing prices, this paper’s evidence of the minimum wage decreasing below-median local housing rents contributes to the literature by suggesting a heterogeneous housing price response to increasing the minimum wage. It also offers new evidence affirming that higher minimum wages improve housing affordability.

Suggested Citation

  • Krieg Tidemann, 2025. "Estimating the Minimum Wage’s Spillover Effect on Below Median Local Housing Rents," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 53(1), pages 37-52, June.
    • Handle: RePEc:kap:atlecj:v:53:y:2025:i:1:d:10.1007_s11293-025-09824-4
    DOI: 10.1007/s11293-025-09824-4
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    References listed on IDEAS

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