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A Survey of the Effects of the Minimum Wage on Prices

Author

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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, Department of Economics, University of Leicester.
  • Handle: RePEc:lec:leecon:06/9
    as

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    File URL: http://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. Jonathan Wadsworth, 2010. "Did the National Minimum Wage Affect UK Prices?," Fiscal Studies, Institute for Fiscal Studies, vol. 31(1), pages 81-120, March.
    2. Brian Bell & Stephen Machin, 2018. "Minimum Wages and Firm Value," Journal of Labor Economics, University of Chicago Press, vol. 36(1), pages 159-195.
    3. Egeln, Jürgen & Gottschalk, Sandra & Gürtzgen, Nicole & Niefert, Michaela & Rammer, Christian & Sprietsma, Maresa & Schröder, Helmut & Schütz, Holger & Frei, Corinna & Reich, Patrick Simon & Vossemer,, 2011. "Evaluation bestehender gesetzlicher Mindestlohnregelungen - Branche: Abfallwirtschaft (Aktenzeichen: Zb 1-04812-3/10f)," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 110536.
    4. Emek Basker & Muhammad Taimur Khan, 2016. "Does the Minimum Wage Bite into Fast-Food Prices?," Journal of Labor Research, Springer, vol. 37(2), pages 129-148, June.
    5. 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.
    6. Tonin, Mirco, 2011. "Minimum wage and tax evasion: Theory and evidence," Journal of Public Economics, Elsevier, vol. 95(11), pages 1635-1651.
    7. Luis Eduardo Arango & Luz Karine Ardila & Miguel Ignacio Gömez, 2010. "Efecto del cambio del salario mínimo en el precio de las comidas fuera del hogar en Colombia," Borradores de Economia 584, Banco de la Republica de Colombia.
    8. Katalin Bodnár & Ludmila Fadejeva & Stefania Iordache & Liina Malk & Desislava Paskaleva & Jurga Pesliakaite & Nataša Todorovic Jemec & Peter Tóth & Robert Wyszynski, 2017. "How do firms adjust to rises in the minimum wage? Survey evidence from Central and Eastern Europe," Working and Discussion Papers WP 9/2017, Research Department, National Bank of Slovakia.
    9. John Schmitt, 2013. "Why Does the Minimum Wage Have No Discernible Effect on Employment?," CEPR Reports and Issue Briefs 2013-04, Center for Economic and Policy Research (CEPR).
    10. repec:eee:labeco:v:47:y:2017:i:c:p:163-181 is not listed on IDEAS
    11. repec:spr:ijlaec:v:60:y:2017:i:1:d:10.1007_s41027-017-0077-0 is not listed on IDEAS
    12. Megan Linde Leonard & T. D. Stanley & Hristos Doucouliagos, 2014. "Does the UK Minimum Wage Reduce Employment? A Meta-Regression Analysis," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 499-520, September.
    13. Margherita Comola & Luiz de Mello, 2009. "How Does Decentralised Minimum-Wage Setting Affect Unemployment and Informality?: The Case of Indonesia," OECD Economics Department Working Papers 710, OECD Publishing.

    More about this item

    Keywords

    minimum wage; employment; labour costs; cost shock; pass-through;

    JEL classification:

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

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