Restaurant Prices and the Minimum Wage

Fougère, Denis; Gautier, Erwan; le Bihan, Hervé

doi:10.2139/ssrn.1369816

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Restaurant Prices and the Minimum Wage

IZA Discussion Paper No. 4070

55 Pages Posted: 30 Mar 2009

See all articles by Denis Fougère

Denis Fougère

National Center for Scientific Research (CNRS); CNRS and SCIENCES PO PARIS; IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

Hervé le Bihan

Banque de France - Centre de Recherche

There are 3 versions of this paper

Abstract

We examine the effect of the minimum wage on restaurant prices. We contribute to both the study of economic impact of the minimum wage and to the micro patterns of price stickiness. For that purpose, we use a unique dataset of individual price quotes collected to calculate theConsumer Price Index in France and we estimate a price rigidity model based on a flexible (S; s) rule. We find a positive and significant impact of the minimum wage on prices. The effect of the minimum wage on prices is however very protracted. The aggregate impact estimated with our model takes more than a year to fully pass through to retail prices.

Keywords: price stickiness, minimum wage, inflation, restaurant prices

JEL Classification: E31, D43, L11

Suggested Citation: Suggested Citation

Fougere, Denis and Fougere, Denis and Gautier, Erwan and Le Bihan, Herve, Restaurant Prices and the Minimum Wage. IZA Discussion Paper No. 4070, Available at SSRN: https://ssrn.com/abstract=1369816 or http://dx.doi.org/10.2139/ssrn.1369816