Stimulus Effect of the Minimum Wage In the question about the minimum wage found here, I have heard several times that an increase in the minimum wage can, as one of several competing effects, "boost the economy" by increasing the income of some workers. Under what conditions could this happen, if at all? Are there any papers (peer-reviewed journal articles) out there that make this claim?
From the Chicago Federal Reserve:


  Following a minimum wage hike, household income rises on average by about \$250 per quarter and spending by roughly \$700 per quarter for households with minimum wage workers. Most of the spending response is caused by a small number of households who purchase vehicles


http://www.chicagofed.org/digital_assets/publications/working_papers/2007/wp2007_23.pdf

Aaronson, D., S. Agarwal, and E. French  (2011): "The Spending and Debt Responses to Minimum Wage Increases" Federal Reserve Bank of Chicago Working Paper, WP 2007-23.