AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 23 – Economics

 

Restaurant Prices and the Minimum Wage

Denis Fougère, Erwan Gautier and Hervé Le Bihan 

Abstract

We examine the efect 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 Önd a positive and signifcant impact of the minimum wage on prices. We obtain that the efect 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.

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