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Title: Restaurant Prices and the Minimum Wage

Author(s): Denis Fougère, Erwan Gautier and Hervé Le Bihan

Publication Date: June 2008

Keyword(s): Inflation, Minimum wage, Price stickiness and Restaurant prices

Programme Area(s): International Macroeconomics and Labour Economics

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 dataset of individual price quotes used to calculate the Consumer Price Index in France. We find a positive and significant 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.

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Bibliographic Reference

Fougère, D, Gautier, E and Le Bihan, H. 2008. 'Restaurant Prices and the Minimum Wage'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6892