How Do Federal Regulations Affect Consumer Prices? An Analysis of the Regressive Effects of Regulation

Abstract

While several scholarly papers have documented potential costs associated with the burden of federal regulations, none have provided a comprehensive empirical analysis of the effect of regulations on consumer prices. This study examines the relationship between regulatory expansion and higher prices and asks whether those price increases have a disproportionately negative effect on low-income households. By combining microdata from the Consumer Expenditure Survey with industry-specific regulation information from RegData and price changes in the Consumer Price Index, we find evidence of regressive regulatory effects. Our results suggest that the poorest households spend a larger proportion of their income on goods that are heavily regulated and subject to both high and volatile prices.