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.
Denis Fougère, Erwan Gautier and Hervé Le Bihan
Classification JEL : E31, D43, L11
Keywords : Price stickiness, minimum wage, inflation, restaurant prices.
Updated on: 06/12/2018 10:59