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Title: Minimum Wage and Real Wage Inequality: Evidence from Pass-Through to Retail Prices

Citation Type: Miscellaneous

Publication Year: 2018

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Abstract: This paper jointly considers the impact of the minimum wage on both labor and product markets using detailed store-level scanner data. I provide empirical evidence that a 10% increase in the minimum wage raises grocery store prices by 0.6%-0.8%, and suggest that the minimum wage not only raises labor costs but also affects product demand, especially in poorer regions. This points to novel channels of heterogeneity in pass-through that have distributional consequences, with key implications for real wage inequality, residential segregation, and future minimum wage increases. I also find that price rigidity within retail chains ameliorates these effects, reducing the pass-through elasticity for retail prices by about 60%.

Url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2786411

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Authors: Leung, Justin

Publisher: University of Chicago

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other

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