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A Survey of the Effects of the Minimum Wage on Prices

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  • Sara Lemos

Abstract

It is well established in the literature that minimum wage increases compress the wage distribution. Firms respond to these higher labour costs by reducing employment, reducing profits, or raising prices. While there are hundreds of studies on the employment effect of the minimum wage, there are merely a handful of studies on its profit effects, and only a couple of dozen studies on its price effects. Furthermore, a comprehensive survey on minimum wage price effects is not available in the literature. Given the policy relevance of this neglected issue, in this paper we summarise and critically compare the available evidence on the effects of minimum wages on prices.

Suggested Citation

  • Sara Lemos, 2006. "A Survey of the Effects of the Minimum Wage on Prices," Discussion Papers in Economics 06/9, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:06/9
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp06-9.pdf
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Economists disagree on whether the minimum wage kills jobs. Why?
      by Brad Plumer in Ezra Klein's Wonkblog on 2013-02-14 20:00:01

    Citations

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    Cited by:

    1. Sara Lemos, 2008. "A Survey Of The Effects Of The Minimum Wage On Prices," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 187-212, February.
    2. Tonin, Mirco, 2011. "Minimum wage and tax evasion: Theory and evidence," Journal of Public Economics, Elsevier, vol. 95(11), pages 1635-1651.
    3. Tonin, Mirco, 2007. "Minimum wage and tax evasion: theory," Discussion Paper Series In Economics And Econometrics 0711, Economics Division, School of Social Sciences, University of Southampton.

    More about this item

    Keywords

    minimum wage; employment; labour costs; cost shock; pass-through;
    All these keywords.

    JEL classification:

    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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