Price and Quality Responses of the Restaurant Industry to Increases in the Minimum Wage [pdf]
(Job Market Paper)
Using a novel dataset comprised of online menu item and restaurant quality information from thousands of primarily non-chain establishments across three states, I estimate the price and quality responses to varying levels of minimum wage increases enacted at the start of 2017. I find that prices rise 0.3% to 0.8% in response to a 10% increase in the minimum wage. These results are consistent with previous estimates in the literature, as well as what is predicted by the textbook model of competitive factor markets and monopolistically competitive firms. Building on this, I then extend the literature to more broadly understand the price pass-through as well as provide the first estimates of responses on quality. I find heterogeneity in pass through across restaurant characteristics, with higher pass-through among small firms, and lower pass-through for restaurants near the border of a minimum wage policy region. At the menu item level, pass-through is higher for sides and sandwiches, and options with organic or gluten-free ingredients. I find no evidence of higher pass-through for popular items. Finally, I find significant changes in restaurant quality due to an increase in the minimum wage. Specifically, I find that for low quality restaurants, quality decreases after an increase in the minimum wage, but that quality increases for high quality restaurants.
The Pass-Through of the Largest Tax on Sugar-Sweetened Beverages: The Case of Boulder, Colorado [pdf]
(with John Cawley, David Frisvold, and David Jones)
We estimate the incidence of a relatively new type of excise tax, a tax on sugar-sweetened beverages (SSBs). We examine the largest such tax to date, which is two cents per ounce, in Boulder, CO. Using data that were hand-collected from stores and restaurants in both Boulder and two control communities, as well as internet data of restaurant menus, we find that the tax was largely, but not completely, passed through to consumers 5-7 weeks after implementation. Some retailers add the tax only at the register, indicating that estimates solely from posted prices would result in an underestimate of pass-through.
Works In Progress
Labor Market Effects of a Health Shock on the Aging Population: Evidence from Trans Fat Bans
The Effects of the ACA Menu Labeling Requirement on Restaurant Menus (with David Frisvold, Charles Courtemanche, and Michael Price)
The Impact of School Year Calendar Structure on Childhood Weight Gain