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A survey of the effects of the minimum wage on prices

By Sara Lemos

Abstract

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

Topics: minimum wage, employment, labour costs, cost shock, pass-through
Publisher: Dept. of Economics, University of Leicester
Year: 2006
OAI identifier: oai:lra.le.ac.uk:2381/7440

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