To be (worried) or not to be? The impact of minimum wage increases on aggregate prices

Abstract

This paper estimates the effect of statutory minimum wage increases on aggregate consumer prices across 29 OECD countries during the synchronised inflationary cycle of 2021–2024. Exploiting staggered minimum wage reviews under a rare quasi-experimental environment of common global shocks, we implement a novel difference-in-differences estimator that accommodates the cumulative nature of wage floors and evolving treatment intensity. A 10 percent increase in the minimum wage raises aggregate prices by 0.3 percent over five months, with effects concentrated in food prices. Our estimates fall within the range of prior micro- and sectoral studies, but extend the literature by recovering the full temporal pass-through path. Our design-based approach demonstrates that credible inference is attainable in macro panels without micro-level data. The findings clarify the inflationary footprint of wage policies and offer a replicable framework for policy evaluation in macro-labour contexts.