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The Pass-Through of Minimum Wages into U.S. Retail Prices: Evidence from Supermarket Scanner Data

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  • Tobias Renkin
  • Claire Montialoux
  • Michael Siegenthaler

Abstract

This paper estimates the pass-through of minimum wage increases into the prices of U.S. grocery and drug stores. We use high-frequency scanner data and leverage a large number of state-level increases in minimum wages between 2001 and 2012. We find that a 10% minimum wage hike translates into a 0.36% increase in the prices of grocery products. This magnitude is consistent with a full pass-through of cost increases into consumer prices. We show that price adjustments occur mostly in the three months following the passage of minimum wage legislation rather than after implementation, suggesting that pricing of groceries is forward-looking.

Suggested Citation

  • Tobias Renkin & Claire Montialoux & Michael Siegenthaler, 2022. "The Pass-Through of Minimum Wages into U.S. Retail Prices: Evidence from Supermarket Scanner Data," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 890-908, December.
    • Handle: RePEc:tpr:restat:v:104:y:2022:i:5:p:890-908
    DOI: 10.1162/rest_a_00981
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    Cited by:

    1. Hill, Seth J, 2023. "Minimum Wages and Homelessness," OSF Preprints z2fqj, Center for Open Science.
    2. Sebastian Link, 2019. "The Price and Employment Response of Firms to the Introduction of Minimum Wages," CESifo Working Paper Series 7575, CESifo.
    3. Brown, Jessica H. & Herbst, Chris M., 2023. "Minimum Wage, Worker Quality, and Consumer Well-Being: Evidence from the Child Care Market," IZA Discussion Papers 16257, Institute of Labor Economics (IZA).
    4. Petra E. Todd & Weilong Zhang, 2022. "Distributional Effects of Local Minimum Wages: A Spatial Job Search Approach," NBER Working Papers 30668, National Bureau of Economic Research, Inc.
    5. Haelbig, Mirja & Mertens, Matthias & Müller, Steffen, 2023. "Minimum Wages, Productivity, and Reallocation," IZA Discussion Papers 16160, Institute of Labor Economics (IZA).

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