DP6892 Restaurant Prices and the Minimum Wage
|Author(s):||Denis Fougère, Erwan Gautier, Hervé Le Bihan|
|Publication Date:||June 2008|
|Keyword(s):||Inflation, Minimum wage, Price stickiness, Restaurant prices|
|JEL(s):||D43, E31, L11|
|Programme Areas:||International Macroeconomics, Labour Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=6892|
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.