The Effect of Minimum Wage on Per Capita Income in Arizona: Empirical Analysis

Arizonans have elected to increase the minimum wage twice since 2006 via ballot measures while lawmakers doubt that increasing the minimum wage positively affects workers. Past studies have had conflicting results about the effects of changes in the minimum wage on various indicators of economic health. We utilize a quasi-experimental time-series study analyzing the impact a change in minimum wage has on per capita income specifically within the state of Arizona. The experiment reviews data from 1976 to 2017 from the Bureau of Labor Statistics and the St. Louis Federal Reserve. We conclude that a 1 percent increase in the minimum wage will on average produce a 1.13 percent increase in per capita income in Arizona. Although this study used data specific to Arizona, we believe that there could be a strong case for external validity based on the findings of past studies done in this research area. This conclusion could have large implications concerning the use of minimum wage as an anti-poverty and economic growth policy tool.