Fairly Recently: Must- and Should-Reads, and Writings... (December 8, 2018)

Tobias Renkin, Claire Montialoux, and Michael Siegenthaler: The Pass-through of Minimum Wages into US Retail Prices: Evidence from Supermarket Scanner Data: "We use high-frequency scanner data and leverage a large number of state-level increases in minimum wages between 2001 and 2012. We find that a 10% minimum wage hike translates into a 0.2% increase in grocery prices. This magnitude is consistent with a full pass-through of cost increases into consumer prices...

...Price adjustments occur mostly in the three months following the passage of minimum wage legislation rather than after implementation, suggesting that pricing of groceries is forward-looking. Prices rise as much for goods consumed by low-income and for those consumed by high-income households. Depending on household income, grocery price increases offset between 3 and 12% of the nominal income gains. Our results suggest that consumers rather than firms bear the cost of minimum wage increases in the grocery sector...


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