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Restaurant Prices and the Minimum Wage
Author(s) -
FOUGÈRE DENIS,
GAUTIER ERWAN,
LE BIHAN HERVÉ
Publication year - 2010
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2010.00339.x
Subject(s) - minimum wage , economics , wage , consumer price index (south africa) , rigidity (electromagnetism) , index (typography) , incomes policy , labour economics , price level , monetary economics , monetary policy , structural engineering , world wide web , computer science , engineering
In this paper, we examine the effect of the minimum wage on restaurant prices. We contribute both to the study of economic impact of the minimum wage and to the study of microeconomic patterns of price stickiness. For this purpose, we use a unique data set of individual price quotes collected to calculate the Consumer Price Index in France and we estimate a price rigidity model based on a flexible 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. A change in the minimum wage takes more than a year to fully pass through to retail prices.