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Restaurant Prices and the Minimum Wage

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Author Info
Fougère, D.
Gautier, E.
Le Bihan, H.

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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 dataset of individual price quotes used to calculate the Consumer Price Index in France. We find a positive and significant 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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File URL: http://www.banque-france.fr/gb/publications/telechar/ner/ner216.pdf
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Publisher Info
Paper provided by Banque de France in its series Documents de Travail with number 216.

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Length: 56 pages
Date of creation: 2008
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Handle: RePEc:bfr:banfra:216

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Postal: Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS
Web page: http://www.banque-france.fr/
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Related research
Keywords: Price stickiness ; minimum wage ; inflation; restaurant prices.;

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Find related papers by JEL classification:
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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  29. Wolfson P. & Belman D., 2004. "The Minimum Wage: Consequences for Prices and Quantities in Low-Wage Labor Markets," Journal of Business & Economic Statistics, American Statistical Association, vol. 22, pages 296-311, July. [Downloadable!] (restricted)
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  31. Daniel Aaronson & Eric French, 2007. "Product Market Evidence on the Employment Effects of the Minimum Wage," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 167-200. [Downloadable!]
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