This paper examines the impact of minimum wage policies on employment,income, and working time. Using data from China Health and Nutrition Survey, wefocus on identifying the shocks or minimum wage adjustments using a pre-specifiedmodel. We control for lagged minimum wage standard, individual characteristics,provincial economic and population variables, and provincial and time fixed effects.We find that, relative to average wage level, minimum wage level has been lower overthe years. Minimum wage has barely noticeable effect on employment, some positiveeffect on raising wages, and shortened the working hours for low-income workers. Insummary, we find some beneficial effects of the minimum wage policies.
Using the China Household Income Project survey data, this paper examines the effect of minimum wage regulation on wage growth and wage distribution in China. Moreover, minimum wage's heterogeneous effects on different population groups are also investigated across different industries and ownerships. In general, our evidence empirically supports the view that the minimum wage creates a substitute effect for the low-paid workers, as they experience a small wage growth under the cost of more unemployment. Meanwhile, the wages of workers that slightly higher than the minimum pay before are pushed up by the increase in demand because of the ripple effect, so the wage level for the slightly high-paid workers before grows more than the low-paid groups.
Utilizing the firm-level panel datasets and hand-collected data on county level minimum wage, this paper estimates the effect of minimum wage on firm profitability. As firms may take time to adjust in response to changes in minimum wage, this paper estimates a dynamic panel model with lagged minimum wage. To capture the heterogeneous effect of minimum wage on profitability, this paper further estimates a quantile regression dynamic panel model. Estimation results suggest that the effect of minimum wage in the current year is negative across the whole conditional distribution of profitability and it exhibits an inverted-U shape across conditional quantiles. Instead, the effect of lagged minimum wage is positive at the 5th, 10th, 15th quantiles, negative at the 90th and 95th quantiles, and not significant at other quantiles. Turning to the overall effect of minimum wage, we can find that minimum wage exerts significantly negative effect on profitability at the 5th quantile and quantiles
The minimum wage has been regarded as an important element of public policy for reducing poverty and inequality. Increasing the minimum wage is supposed to raise earnings for millions of low-wage workers and therefore lower earnings inequality. However, there is no consensus in the existing literature from industrialized countries regarding whether increasing the minimum wage has helped lower earnings inequality. Studying the effect of the minimum wage on the earnings distribution is more complicated in developing countries such as China than in industrialized countries owing to the presence of large informal sectors in urban areas, large pools of surplus labor in rural areas, and difficulties in ensuring compliance with minimum wage legislation. China has recently exhibited rapid economic growth and widening earnings inequality. Since China promulgated new minimum wage regulations in 2004, the magnitude and frequency of changes in the minimum wage have been substantial, both over time
Utilizing various sources of data, this paper describes the evolution of minimum wage system in China and analyzes its enforcement. In 2010, 13% of workers in our sample earn wages below local minimum wages. This result is worse than most of developed countries but better than countries with about the same level of economic development as China. Both descriptive statistics and regression analysis indicate that some focused groups of workers ought to be targeted when implementing the minimum wages, including female and less educated workers. Our analysis further indicates that the effect of compliance in minimum wages is not only determined by the effort to enforcement, but also correlated with the level of minimum wage, economic structure, ownership type, and labor market conditions, etc. Our study also implies that the current minimum wage level in China is in accordance with China’s current stage of economic development, and frequent and large increase of minimum wage should be restr
This paper provides evidence on whether the minimum wage (MW) has affected gender wage gaps in urban China. Several major conclusions emerge. First, from 1995 to 2007, the proportion of workers whose wages were below the regional MW level was greater for female workers than for male workers. Second, the results obtained by using the difference-in-differences estimation method show that from a long-term perspective, the MW will help to reduce gender wage differentials and that the effect is more obvious for the low-wage group. However, in the short term, the amelioration effect is not obvious.
China has formulated and implemented the minimum wage policy for over two decades so far, and it is of great practical significance to look back on the formulation and evolution of the policy and assess the implementation effects to further improve the minimum wage policy and makes it fully play its role.
This chapter summarizes the impacts of the minimum wage policy in China on various aspects of the labor market: wages, employment, gender and income inequalities, and regional disparities. In particular, we pay special attention to the 168 million rural-urban migrant workers in China, focusing on the wage and employment impacts they experience as a result of minimum wage policies. Our findings show that since 2004, minimum wages (nominal) in China have substantially increased, with an average of 11 percent per year, leading to positive effects on wages and decreases in gender wage differentials and income inequality. On the other hand, the rising minimum wage has resulted in job losses for young adults, women, and low-skilled workers. For migrant workers, the minimum wage has only small negative impacts on migrants’ employment in the East and Central regions and no effect in the West. In addition, our project finds that employers increase the monthly working hours of migrant workers.
This document summarizes the findings of minimum wages from many aspects in theeconomics literature and we hope it can provide a good starting point for researchers who areinterested in the minimum wage study in China.
This paper empirically analyzes the impact of the Chinese minimum wage regulations on the firm decision to invest in physical and human capital. We exploit the geographical and inter-temporal variation of county-level minimum wages in a large panel data set of Chinese firms covering the introduction of the new Chinese minimum wage regulations in 2004. In our basic regressions including all Chinese firms, we find significant negative effects of the minimum wage on human capital investment rates and significant positive effects on fixed capital investment rates. When grouping firms by their ownership structure, we find that all company groups - including state-owned and foreign-owned companies - have reduced their human capital investments, while only Chinese privately owned companies have increased their fixed capital investment rates.