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Restaurant Prices And The Minimum Wage

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  • Fougere, Denis
  • Gautier, Erwan
  • Le Bihan, Herve

Abstract

We examine the effect of the minimum wage on restaurant prices. For that purpose, we estimate a price rigidity model by exploiting a unique data set of individual price quotes used to calculate the Consumer Price Index in France. We find a positive and signifi cant impact of the minimum wage on prices. We obtain that the effect of the minimum wage on prices is very protracted. The aggregate impact estimated with our model takes more than a year to fully pass through to retail prices.

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Paper provided by American Association of Wine Economists in its series Working Papers with number 44084.

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Date of creation: Oct 2008
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Handle: RePEc:ags:aawewp:44084

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Web page: http://www.wine-economics.org
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Keywords: Price stickiness; minimum wage; inflation; restaurant prices; Demand and Price Analysis; Industrial Organization;

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Minimum wages and the stickiness of restaurant prices
    by Economic Logician in Economic Logic on 2009-04-22 08:02:00
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Cited by:
  1. Avouyi-Dovi, Sanvi & Fougère, Denis & Gautier, Erwan, 2010. "Wage Rigidity, Collective Bargaining and the Minimum Wage: Evidence from French Agreement Data," CEPR Discussion Papers 7932, C.E.P.R. Discussion Papers.
  2. Draca, Mirko & Machin, Stephen & Van Reenen, John, 2006. "Minimum Wages and Firm Profitability," IZA Discussion Papers 1913, Institute for the Study of Labor (IZA).
  3. Bo E. Honoré & Daniel Kaufmann & Sarah Marit Lein, 2012. "Asymmetries in Price-Setting Behavior: New Microeconometric Evidence from Switzerland," Working Papers 2012-09, Swiss National Bank.
  4. Dhyne, Emmanuel & Fuss, Catherine & Pesaran, M. Hashem & Sevestre, Patrick, 2007. "Lumpy Price Adjustments: A Microeconometric Analysis," IZA Discussion Papers 2793, Institute for the Study of Labor (IZA).
  5. Gautier, E. & Le Saout, R., 2012. "The Dynamics of Gasoline Prices: Evidence from Daily French Micro Data," Working papers 375, Banque de France.
  6. Benassi, Chiara, 2011. "The implementation of minimum wage : challenges and creative solutions," ILO Working Papers 462988, International Labour Organization.
  7. Horny, G. & Sevestre, P., 2010. "Wage and price joint dynamics at the firm level: an empirical analysis," Working papers 305, Banque de France.

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