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<br /> <br />The Effects of a $15 Minimum Wage by 2019 in Santa Clara County and San Jose 21 <br /> <br />In a forthcoming paper, Reich et al. (2016) show that our calibrated model predicts extremely <br />small effects for minimum wage increases of up to 25 percent, to a minimum wage of $10. At <br />this minimum wage, the income, scale, and substitution effects are each very small. As the <br />minimum wage reaches higher levels, the (positive) income effect weakens since the increase in <br />the proportion of workers getting pay increases slows down, and because the propensity to <br />consume of higher-paid workers is lower than that of lower paid workers. At the same time, the <br />(negative) scale effect strengthens because turnover cost savings diminish and the price <br />elasticity of consumer demand becomes higher for higher-priced goods.7 Our model is thus <br />consistent with growing negative employment effects at higher minimum wage levels. <br />We have tested our model’s calibration by undertaking a series of robustness tests. The tests <br />show that this net effect changes by small amounts when we vary the model’s parameters (Reich <br />et al. 2016). In the next sections, we discuss how we quantify the effects in each of the boxes in <br />Figure 6. <br />8.A. - Page 35