Document Type

Article

Publication Date

2025

Abstract

Minimum wage laws are a common policy tool to improve economic well-being. This paper examines the impact of minimum wage increases on one measure of financial distress: consumer bankruptcy filing rates. Leveraging county-level data by quarter and employing a stacked event study analysis, it finds that a ten percent increase in the minimum wage reduces the consumer bankruptcy filing rate by 3.6 percent. The analysis suggests that changes in asset and debt accumulation play a key role in driving this effect. There is no evidence supporting the hypothesis that minimum wage laws impact bankruptcy rates through disemployment effects.

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