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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.

Suggested Citation

  • Fougere, Denis & Gautier, Erwan & Le Bihan, Herve, 2008. "Restaurant Prices And The Minimum Wage," Working Papers 44084, American Association of Wine Economists.
  • Handle: RePEc:ags:aawewp:44084
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    Cited by:

    1. Dhyne, Emmanuel & Fuss, Catherine & Pesaran, M. Hashem & Sevestre, Patrick, 2011. "Lumpy Price Adjustments: A Microeconometric Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(4), pages 529-540.
    2. 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.
    3. Erwan Gautier & Ronan Le Saout, 2015. "The Dynamics of Gasoline Prices: Evidence from Daily French Micro Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(6), pages 1063-1089, September.
    4. Nicoletta Berardi & Thomas Eife & Erwan Gautier, 2014. "Optimal price setting during a currency changeover: theory and evidence from french restaurants," Applied Economics, Taylor & Francis Journals, vol. 46(23), pages 2766-2782, August.
    5. Sanvi Avouyi-Dovi & Denis Fougère & Erwan Gautier, 2013. "Wage Rigidity, Collective Bargaining, and the Minimum Wage: Evidence from French Agreement Data," The Review of Economics and Statistics, MIT Press, pages 1337-1351.
    6. Youssef Benzarti & Dorian Carloni, 2017. "Who Really Benefits from Consumption Tax Cuts? Evidence from a Large VAT Reform in France," NBER Working Papers 23848, National Bureau of Economic Research, Inc.
    7. Arpaia, Alfonso & Cardoso, Pedro & Kiss, Aron & Van Herck, Kristine & Vandeplas, Anneleen, 2017. "Statutory Minimum Wages in the EU: Institutional Settings and Macroeconomic Implications," IZA Policy Papers 124, Institute for the Study of Labor (IZA).
    8. Mirko Draca & Stephen Machin & John Van Reenen, 2011. "Minimum Wages and Firm Profitability," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 129-151, January.
    9. Horny, G. & Sevestre, P., 2010. "Wage and price joint dynamics at the firm level: an empirical analysis," Working papers 305, Banque de France.
    10. Antje Schubert & Michael Weber, 2016. "Der flächendeckende Mindestlohn in Sachsen: Hohe Reichweite, vielfältige Reaktionen der Betriebe," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 23(03), pages 05-11, June.
    11. repec:ilo:ilowps:462988 is not listed on IDEAS
    12. Daniel MacDonald & Eric Nilsson, 2016. "The Effects of Increasing the Minimum Wage on Prices: Analyzing the Incidence of Policy Design and Context," Upjohn Working Papers and Journal Articles 16-260, W.E. Upjohn Institute for Employment Research.

    More about this item

    Keywords

    Price stickiness; minimum wage; inflation; restaurant prices; Demand and Price Analysis; Industrial Organization;

    JEL classification:

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

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