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Title: Wages, Minimum Wages, and Price Pass-Through: The Case of McDonald’s Restaurants
Authors: Ashenfelter, Orley
Jurajda, Štěpán
Keywords: JEL Codes: J23, J30, J38
Issue Date: Jan-2021
Series/Report no.: 646
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.
Appears in Collections:IRS Working Papers

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