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Restaurant Prices and the Minimum Wage

  • DENIS FOUGERE
  • ERWAN GAUTIER
  • HERVE LE BIHAN

In this paper, we examine the effect of the minimum wage on restaurant prices. We contribute both to the study of economic impact of the minimum wage and to the study of microeconomic patterns of price stickiness. For this purpose, we use a unique data set of individual price quotes collected to calculate the Consumer Price Index in France and we estimate a price rigidity model based on a flexible   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. A change in the minimum wage takes more than a year to fully pass through to retail prices. Copyright (c) 2010 The Ohio State University.

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Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 42 (2010)
Issue (Month): 7 (October)
Pages: 1199-1234

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Handle: RePEc:mcb:jmoncb:v:42:y:2010:i:7:p:1199-1234
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