%0 Report
        %A González, Ignacio
%A Sala, Hector
%A Trivín, Pedro
        %T Consumption Responses to a Major Minimum Wage Increase: Evidence from Spain
        %D 2025
        %8 2025 May
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 17923
        %U https://www.iza.org/publications/dp17923
        %X This paper investigates the effects of minimum wage increases on household consumption, focusing on Spain’s 2019 minimum 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 credit card payments 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 nonessential 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.
        %K nonhomothetic preferences
%K minimum wage
%K consumption
%K transaction data
%K discretionary spending