Abstract

http://ssrn.com/abstract=630515
 
 

References (37)



 
 

Citations (8)



 


 



The Minimum Wage, Restaurant Prices, and Labor Market Structure


Daniel Aaronson


Federal Reserve Bank of Chicago

Eric French


Federal Reserve Bank of Chicago; Department of Economics

James M. MacDonald


U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

August 3, 2007

FRB of Chicago Working Paper No. 2004-21

Abstract:     
Using store-level and aggregated Consumer Price Index data, we show that restaurant prices rise in response to minimum wage increases under several sources of identifying variation. We introduce a general model of employment determination that implies minimum wage hikes cause prices to rise in competitive labor markets but potentially fall in monopsonistic environments. Furthermore, the model implies employment and prices are always negatively related. Therefore, our empirical results provide evidence against the importance of monopsony power for understanding small observed employment responses to minimum wage changes. Our estimated price responses challenge other explanations of the small employment response too.

Number of Pages in PDF File: 55

Keywords: Minimum wage, prices, monopsony

JEL Classification: E30, J23, J42

working papers series





Download This Paper

Date posted: December 11, 2004 ; Last revised: July 14, 2011

Suggested Citation

Aaronson, Daniel and French, Eric and MacDonald, James M., The Minimum Wage, Restaurant Prices, and Labor Market Structure (August 3, 2007). FRB of Chicago Working Paper No. 2004-21. Available at SSRN: http://ssrn.com/abstract=630515 or http://dx.doi.org/10.2139/ssrn.630515

Contact Information

Daniel Aaronson (Contact Author)
Federal Reserve Bank of Chicago ( email )
230 South LaSalle Street
Chicago, IL 60604-1413
United States
Eric French
Federal Reserve Bank of Chicago ( email )
230 South LaSalle Street
Chicago, IL 60604-1413
United States
312-322-5322 (Phone)
312-322-5111 (Fax)
Department of Economics ( email )
Gower Street
London, WC1E 6BT
United Kingdom
James M. MacDonald
U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )
355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5610 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 4,308
Downloads: 347
Download Rank: 49,913
References:  37
Citations:  8

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.375 seconds