Around 75 pct of the minimum wage increase in Hungary was paid by consumers and 25 pct by firm owners; disemployment effects were greater in industries where passing the wage costs to consumers is more difficult

Who Pays for the Minimum Wage? Péter Harasztosi, Attila Lindner. American Economic Review, forthcoming, https://www.aeaweb.org/articles?id=10.1257/aer.20171445&&from=f

Abstract: This paper provides a comprehensive assessment of the margins along which firms responded to a large and persistent minimum wage increase in Hungary. We show that employment elasticities are negative but small even four years after the reform; that around 75 percent of the minimum wage increase was paid by consumers and 25 percent by firm owners; that firms responded to the minimum wage by substituting labor with capital; and that dis-employment effects were greater in industries where passing the wage costs to consumers is more difficult. We estimate a model with monopolistic competition to explain these findings.