A Survey of the Effects of the Minimum Wage on Prices

Sara Lemos

No 06/9, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: It is well established in the literature that minimum wage increases compress the wage distribution. Firms respond to these higher labour costs by reducing employment, reducing profits, or raising prices. While there are hundreds of studies on the employment effect of the minimum wage, there are merely a handful of studies on its profit effects, and only a couple of dozen studies on its price effects. Furthermore, a comprehensive survey on minimum wage price effects is not available in the literature. Given the policy relevance of this neglected issue, in this paper we summarise and critically compare the available evidence on the effects of minimum wages on prices.

Keywords: minimum wage; employment; labour costs; cost shock; pass-through (search for similar items in EconPapers)
JEL-codes: J38 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-cba, nep-lab and nep-ltv
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: A SURVEY OF THE EFFECTS OF THE MINIMUM WAGE ON PRICES (2008)
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