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Restaurant Prices and the Minimum Wage

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  • Fougère, Denis

    ()
    (CREST)

  • Gautier, Erwan

    ()
    (Bank of France)

  • Le Bihan, Hervé

    ()
    (Bank of France)

Abstract

We examine the effect of the minimum wage on restaurant prices. We contribute to both the study of economic impact of the minimum wage and to the micro patterns of price stickiness. For that purpose, we use a unique dataset of individual price quotes collected to calculate the Consumer Price Index in France and we estimate a price rigidity model based on a flexible (S; s) rule. We find a positive and significant impact of the minimum wage on prices. The effect of the minimum wage on prices is however 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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4070.

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Length: 55 pages
Date of creation: Mar 2009
Date of revision:
Publication status: published in: Journal of Money, Credit and Banking, 2010, 42 (7), 1199-1234
Handle: RePEc:iza:izadps:dp4070

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Keywords: restaurant prices; price stickiness; minimum wage; inflation;

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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. Dhyne, E. & Fuss, C. & Pesaran, H. & Sevestre, P., 2007. "Lumpy Price Adjustments: A Microeconometric Analysis," Working papers 185, Banque de France.
  2. Draca, Mirko & Machin, Steve & Van Reenen, John, 2006. "Minimum Wages and Firm Profitability," CEPR Discussion Papers 5456, C.E.P.R. Discussion Papers.
  3. Avouyi-Dovi, S. & Fougère, D. & Gautier, E., 2010. "Wage rigidity, collective bargaining and the minimum wage: evidence from French agreement data," Working papers 287, Banque de France.
  4. Benassi, Chiara, 2011. "The implementation of minimum wage : challenges and creative solutions," ILO Working Papers 462988, International Labour Organization.
  5. Horny, G. & Sevestre, P., 2010. "Wage and price joint dynamics at the firm level: an empirical analysis," Working papers 305, Banque de France.
  6. Gautier, E. & Le Saout, R., 2012. "The Dynamics of Gasoline Prices: Evidence from Daily French Micro Data," Working papers 375, Banque de France.
  7. Bo E. Honoré & Daniel Kaufmann & Sarah Lein, 2012. "Asymmetries in Price‐Setting Behavior: New Microeconometric Evidence from Switzerland," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 211-236, December.

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