IDEAS home Printed from https://ideas.repec.org/p/uab/wprdea/wpdea2503.html
   My bibliography  Save this paper

Consumption Responses to a Major Minimum Wage Increase: Evidence from Spain

Author

Listed:
  • Ignacio González

    (Department of Economics, American University.)

  • Hector Sala

    (Department of Applied Economics, Universitat Autònoma de Barcelona (UAB) & IZA)

  • Pedro Trivín

    (DEMM, University of Milan)

Abstract

This paper investigates the effects of minimum wage increases on household consumption, focusing on Spain’s 2019 mínimum wage increase, which raised the floor on wages by an unprecedented 22.3% in a low-inflation environment. Leveraging high-frequency, confidential transaction data from point-of-sale devices and crèdit card païments at the municipal level, we exploit geographic variation in exposure to the reform to identify its effects. We find that the increase led to a significant rise of 4.5% in household consumption, with the largest gains concentrated in non essential categories such as electronics, leisure, and spending at restaurants and hotels. We corroborate these findings using household-level data from the Spanish Household Budget Survey. Our findings can be rationalized by a simple model featuring nonhomothetic preferences.

Suggested Citation

  • Ignacio González & Hector Sala & Pedro Trivín, 2025. "Consumption Responses to a Major Minimum Wage Increase: Evidence from Spain," Working Papers wpdea2503, Department of Applied Economics at Universitat Autonoma of Barcelona.
    • Handle: RePEc:uab:wprdea:wpdea2503
    as

    Download full text from publisher

    File URL: https://ddd.uab.cat/repec/doc/wpdea2503.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uab:wprdea:wpdea2503. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dept. Economia Aplicada (email available below). General contact details of provider: https://edirc.repec.org/data/dauabes.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.