Price Pass-Through and Change in the Minimum Wage in Russia

The paper focuses on the estimation of the influence of the minimum wage increases on consumer prices in Russia. This effect has never been investigated before in Russia, thus this research fills the gap and presents the first empirical evidence of minimum wage effects on consumer prices for Russia. The first chapter of paper is dedicated to theoretical issues of minimum wage regulation in different countries, particularly in Russia, and review of Russian and foreign research about consequences of minimum wage increases. The second part includes description of used methodology, dataset and statistical analysis by regions. The third part focuses on empirical results of panel data analysis. The study relies on the standard methodology introduced by Daniel Aaronson and developed by Sara Lemos using Russian minimum wages and Consumer Price Index as price data from 2000 to 2013 by months aggregated at a regional level. As a result of analysis of two largest federal minimum wage increases in 2007 and 2009, it is found that consumer prices generally rise with changes in the minimum wage not only in the month of the increase, but also in two months before this change as well as after increase. Keywords: minimum wage, price effect, labor economics, inflation, Russia.