Bhagyashree Katare, Purdue University - Does Wage Increase Impact Service Quality?

Title: Does Wage Increase Impact Service Quality? Evidence from Restaurant Food Safety Inspection

Abstract:  This paper examines whether a wage increase affects the customer service quality provided by low-wage employees and if there are any spillover effects of wage increase on service quality offered by the employers. We use restaurant-level food safety inspections and leverage a large number of jurisdiction-level minimum wage changes between 2010 and 2019. We find that wage increase reduces overall restaurant violations and improves service quality. These results are mainly driven by decrease in employee-associated violations. Employer-associated severe violations, that can cause adverse consumer health outcomes, increase in response to wage increase.

Presenter: Bhagyashree Katare, Purdue University

If you would like to subscribe to the Melbourne Institute Seminar Series email list, please contact us.