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

2016 ◽  
Author(s):  
Justin Leung
Keyword(s):  
Minimum Wage ◽  
Wage Inequality ◽  
Real Wage ◽  
Retail Prices ◽  
Pass Through

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

2020 ◽  
pp. 1-47
Author(s):  
Justin H. Leung
Keyword(s):  
Minimum Wage ◽  
Wage Inequality ◽  
Real Wage ◽  
Grocery Store ◽  
Labor Costs ◽  
Product Demand ◽  
Retail Prices ◽  
Retail Chains ◽  
Pass Through ◽  
The Impact

This paper 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. I also find that price rigidity within retail chains ameliorates these effects, reducing the pass-through elasticity for retail prices by about 60%.

scholarly journals The Pass-Through of Minimum Wages into US Retail Prices: Evidence from Supermarket Scanner Data

2020 ◽  
pp. 1-99
Author(s):  
Tobias Renkin ◽  
Claire Montialoux ◽  
Michael Siegenthaler
Keyword(s):  
Minimum Wage ◽  
State Level ◽  
Minimum Wages ◽  
Scanner Data ◽  
Consumer Prices ◽  
Retail Prices ◽  
Minimum Wage Legislation ◽  
Pass Through ◽  
Wage Increases ◽  
Grocery Products

This paper estimates the pass-through of minimum wage increases into the prices of US grocery and drug stores. 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 0.36% increase in the prices of grocery products. This magnitude is consistent with a full pass-through of cost increases into consumer prices. We show that 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.

scholarly journals The impact of a minimum wage change on the distribution of wages and household income

2020 ◽  
Author(s):  
Paul Redmond ◽  
Karina Doorley ◽  
Seamus McGuinness
Keyword(s):  
Income Distribution ◽  
Minimum Wage ◽  
Wage Inequality ◽  
Household Income ◽  
Spillover Effects ◽  
Wage Distribution ◽  
Wage Increase ◽  
Minimum Wage Increase ◽  
Wage Change ◽  
The Impact

Abstract We use distribution regression analysis to study the impact of a 6% increase in the Irish minimum wage on the distribution of hourly wages and household income. Wage inequality, measured by the ratio of wages in the 90th and 10th percentiles and the 75th and 25th percentiles, decreased by approximately 8 and 4%, respectively. The results point towards wage spillover effects up to the 30th percentile of the wage distribution. We show that minimum wage workers are spread throughout the household income distribution and are often located in high-income households. Therefore, while we observe strong effects on the wage distribution, the impact of a minimum wage increase on the household income distribution is quite limited.

scholarly journals Farm Product Prices, Redistribution, and the Early U.S. Great Depression

2021 ◽  
pp. 1-39
Author(s):  
Joshua K. Hausman ◽  
Paul W. Rhode ◽  
Johannes F. Wieland
Keyword(s):  
Great Depression ◽  
Propagation Mechanism ◽  
Farm Product ◽  
Retail Prices ◽  
Marginal Propensity ◽  
Pass Through

We argue that falling farm product prices, incomes, and spending may explain 10–30 percent of the 1930 U.S. output decline. Crop prices collapsed, reducing farmers’ incomes. And across U.S. states and Ohio counties, auto sales fell most in crop-growing areas. The large spending response may be explained by farmers’ indebtedness. Reasonable assumptions about the marginal propensity to spend of farmers relative to nonfarmers and the pass-through of farm prices to retail prices imply that the collapse of farm product prices in 1930 was a powerful propagation mechanism worsening the Depression.

Lowering wage inequality with the minimum wage increase in Slovenia

2021 ◽  
Vol 13 (3) ◽  
pp. 306
Author(s):  
Suzana Laporšek ◽  
Milan Vodopivec ◽  
Matija Vodopivec
Keyword(s):  
Minimum Wage ◽  
Wage Inequality ◽  
Wage Increase ◽  
Minimum Wage Increase

Margins of Fair Trade Wine along the Supply Chain: Evidence from South African Wine in the U.S. Market

2019 ◽  
Vol 14 (3) ◽  
pp. 274-297
Author(s):  
Robin M. Back ◽  
Xinyang Liu ◽  
Britta Niklas ◽  
Karl Storchmann ◽  
Nick Vink
Keyword(s):  
Supply Chain ◽  
South African ◽  
Fair Trade ◽  
The United States ◽  
Export Prices ◽  
Retail Prices ◽  
Pass Through ◽  
Matching Models ◽  
The Cost ◽  
Cost Effect

AbstractIn this paper, we analyze profit margins and markups of Fair Trade (FT) wines sold in the United States. We are particularly interested in whether and to what extent the FT cost impulse in production is passed along to the supply chain. We draw on a limited sample of about 470 South African wines sold in Connecticut and New Jersey in the fall of 2016; about 90 of them are certified FT. For these wines we have free on board export prices, wholesale prices, and retail prices, which allows us to compute wholesale and retail margins and analyze the FT treatment effect. We run OLS, 2SLS, and propensity score matching models and find evidence of asymmetrical pricing behavior. While wholesalers seem to fully pass-through the FT cost effect, retailers appear to amplify the cost effect. As a result, at the retail level, FT wines yield significantly higher margins than their non-FT counterparts. (JEL Classifications: L11, L31, L43, L81, Q17)

scholarly journals Beliefs and Consumer Search in a Vertical Industry

2019 ◽  
Vol 18 (5) ◽  
pp. 2359-2393 ◽  
Author(s):  
Maarten Janssen ◽  
Sandro Shelegia
Keyword(s):  
Low Cost ◽  
Search Costs ◽  
Retail Price ◽  
Consumer Search ◽  
Common Assumption ◽  
Vertical Relations ◽  
Retail Prices ◽  
The Common ◽  
Search Market ◽  
Pass Through

Abstract This paper studies vertical relations in a search market. As the wholesale arrangement between a manufacturer and its retailers is typically unobserved by consumers, their beliefs about who is to be blamed for a price deviation play a crucial role in determining wholesale and retail prices. The common assumption in the consumer search literature is that consumers exclusively blame an individual retailer for a price deviation. We show that in the vertical relations context, predictions based on this assumption are not robust in the sense that if consumers hold the upstream manufacturer at least partially responsible for the deviation, equilibrium predictions are qualitatively different. For robust beliefs, the vertical model can explain a variety of observations, such as retail price rigidity (or, alternatively, low cost pass-through), nonmonotonicity of retail prices in search costs, and (seemingly) collusive retail behavior. The model can be used to study a monopoly online platform that sells access to final consumers.

Reducing Wage Inequality

2016 ◽  
Vol 44 (1) ◽  
pp. 68-88 ◽  
Author(s):  
Gerhard Bosch ◽  
Claudia Weinkopf
Keyword(s):  
Minimum Wage ◽  
Wage Inequality ◽  
The State ◽  
Job Quality ◽  
High Rate ◽  
Labor Standards ◽  
Political Pressure ◽  
Collective Agreements ◽  
Nation States

This article concurs with Weiss’s critique of the myth of the powerless state, which underestimates the possibilities that remain open to nation states to take action. Even today in an environment characterized by globalized markets, nation states have at their disposal instruments that can effectively ensure high job quality. The Swedish and French examples show that the state, by means of various combinations of participative and protective labor standards, can ensure that there is a low share of low-wage workers and a high rate of coverage by collective agreements. Given sufficient political pressure, new standards, such as the minimum wage in Germany, can be put in place.

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