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Abstract

This dissertation is composed of two chapters studying the impact of government policies on retail prices and welfare. The first chapter estimates the impact of the minimum wage on retail prices using 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. The second chapter estimates the impact of the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamp Program) on retail prices, sales, and household consumption. We develop a theoretical partial equilibrium framework to calculate the local incidence of SNAP benefits for SNAP-eligible products, using our reduced-form estimates as sufficient statistics. We find that producers mostly benefit at the expense of non-SNAP households due to market power. A marginal dollar of SNAP benefits increases producer surplus by about $0.5, increases SNAP consumer surplus by about $0.7, and decreases non-SNAP consumer surplus by about $0.4. If the objective of SNAP is to guarantee a floor of real spending power on food, federal maximum benefits should be increased by about 10% to account for the price response.

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