The Effect of the Minimum Wage on Prices: A New Survey and a Meta-Analysis

Recent minimum-wage studies have focused on adjustment margins that may explain the limited employment response to minimum wage changes. We examine the recent literature on the price effects of minimum wage increases, updating earlier surveys conducted before quasiexperimental methods became widespread. We then conduct a meta-analysis of 199 estimates of the price elasticity of minimum wages. Our meta-estimates of this elasticity range from 0.03 to 0.11, indicating that a 10% increase in the minimum wage leads to a 0.3 to 1.1% rise in prices. Recent quasi-experimental studies across broad categories of goods tend to find smaller elasticities than older regression-based estimates. In contrast, studies focused on narrower, labor-intensive industries tend to see larger price pass-throughs of minimum wage increases.