Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald's Restaurants

Orley Ashenfelter and Stepan Jurajda

Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: Based on hourly wage rates from nearly all McDonald's restaurants, and prices of the Big Mac sandwich, we find an elasticity of the wage with respect to the minimum wage of 0.7. This elasticity does not differ between affected and unaffected restaurants because many restaurants maintain a constant wage ‘premium’ above the minimum wage. Higher minimum wages are not associated with faster adoption of touch-screen ordering, and there is near-full price pass-through of minimum wages. Minimum wages lead to higher real wages (expressed in Big Macs per hour) that are one fifth lower than the corresponding increases in nominal wages.

JEL-codes: J23 J30 J38 (search for similar items in EconPapers)
Date: 2021-01
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald's Restaurants (2021)
Working Paper: Wages, Minimum Wages, and Price Pass-through: The Case of McDonald's Restaurants (2021)
Working Paper: Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald’s Restaurants (2021)
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