TY  - RPRT
        AU  - González, Ignacio
AU  - Sala, Hector
AU  - Trivín, Pedro
        TI  - Consumption Responses to a Major Minimum Wage Increase: Evidence from Spain
        PY  - 2025/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17923
        UR  - https://www.iza.org/publications/dp17923
        AB  - 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.
        KW  - nonhomothetic preferences
KW  - minimum wage
KW  - consumption
KW  - transaction data
KW  - discretionary spending
        ER  -