Price pass-through and the minimum wage

Author(s): Aaronson, Daniel

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Abstract \xa0 This paper tests a textbook consequence of competitive markets: that an industry-wide increase in the price of labor is passed on to consumers through an increase in prices. Using several data sources on restaurant prices, the price impact of minimum-wage hikes in Canada and the US is explored. Particular attention is paid to the timing of these price responses to gauge the stickiness of minimum-wage cost shocks. Restaurant prices generally rise with changes in the wage bill and this response is concentrated in the quarter surrounding the month during which the legislation is enacted.
Publication Title The review of economics and statistics
Publisher MIT Press
Publication Date 2001
URIs http://www.econis.eu/PPNSET?PPN=32759716X
http://www.jstor.org/stable/2646698
http://www.mitpressjournals.org/doi/abs/10.1162/003465301750160126
http://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcAuth=SerialsSolutions&SrcApp=Summon&KeyUT=000167056800014&DestLinkType=FullRecord&DestApp=WOS
http://search.proquest.com/docview/194687486
Keywords 1978-1995
Analysis
BEHAVIOR
CIGARETTE INDUSTRY
Canada
ECONOMICS
Economic theory
IMPERFECT COMPETITION
Impact analysis
Labor costs
MARKET
Minimum Wage
Minimum wage
Northern America
OLIGOPOLY
Price increases
Pricing
Production, Pricing, and Market Structure, Size Distribution of Firms (L11)
Restaurants
SALES TAXES
SOCIAL SCIENCES, MATHEMATICAL METHODS
STATE
Studies
TAXATION
U.S
Wage
Wages, Compensation, and Labor Costs: Public Policy (J38)
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