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Restaurant Prices and the Minimum Wage

  • Denis FOUGERE

    (Crest)

  • Erwan GAUTIER

    (Crest)

  • Hervé LE BIHAN

    (Crest)

In this paper, we examine the e¤ect of the minimum wage on restaurant prices.We contributeboth to the study of economic impact of the minimum wage and to the study of microeconomicpatterns of price stickiness. For this purpose, we use a unique dataset of individual price quotescollected to calculate the Consumer Price Index in France and we estimate a price rigidity modelbased on a ?exible (S; s) rule. We ?nd a positive and signi?cant impact of the minimum wageon prices. The e¤ect of the minimum wage on prices is however very protracted. A change inthe minimum wage takes more than a year to fully pass through to retail prices.

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Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2009-13.

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Length: 55
Date of creation: 2009
Date of revision:
Handle: RePEc:crs:wpaper:2009-13
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