Showing papers by "Eric French published in 2008"
TL;DR: In this paper, the authors show that restaurant prices rise in response to minimum wage increases under several sources of identifying variation, such as store-level and aggregated consumer price index data.
Abstract: Using store-level and aggregated Consumer Price Index data, we show that restaurant prices rise in response to minimum wage increases under several sources of identifying variation. We introduce a general model of employment determination that implies minimum wage hikes cause prices to rise in competitive labor markets but potentially fall in monopsonistic environments. Furthermore, the model implies employment and prices are always negatively related. Therefore, our empirical results provide evidence against the importance of monopsony power for understanding small observed employment responses to minimum wage changes. Our estimated price responses challenge other explanations of the small employment response, too.
112 citations
TL;DR: This paper found that after a minimum wage increase, household income rises on average by about $250 per quarter and spending by roughly $700 per quarter for households with minimum wage workers, and that most of the spending response is caused by a small number of households who purchase vehicles.
Abstract: Following a minimum wage hike, household income rises on average by about $250 per quarter and spending by roughly $700 per quarter for households with minimum wage workers. Most of the spending response is caused by a small number of households who purchase vehicles. Furthermore, we find that the high spending levels are financed through increases in collateralized debt. Our results are consistent with a model where households can borrow against durables and face costs of adjusting their durables stock.
11 citations
Posted Content•
TL;DR: In this paper, the authors present evidence that spending increases more than income, and thus debt rises, in households with minimum wage workers following a minimum wage hike, and they show that the size, timing, persistence, and composition of spending is inconsistent with the basic certainty equivalent life cycle model.
Abstract: This paper presents evidence that spending increases more than income, and thus debt rises, in households with minimum wage workers following a minimum wage hike. Furthermore, we show that the size, timing, persistence, and composition of spending is inconsistent with the basic certainty equivalent life cycle model. However, our findings are consistent with a model where households can borrow against part of the value of their durable goods. ; Preliminary and incomplete.
5 citations
Posted Content•