Economics, Econometrics and Finance
4 years ago

Minimum wage hikes in China lead to higher wages but lower employment.

Review of Development Economics
The impact of minimum wages on wages, wage spillovers, and employment in China: Evidence from longitudinal individual‐level data
Tony Fang, Morley Gunderson, Carl Lin

Paper Summary

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Minimum wage increases in China between 2004 and 2009 raised wages for low-wage workers by about 41% of the minimum wage hike. However, this also led to a 2-4% decrease in the likelihood of employment, with a 2.8% decrease as the most likely outcome. Workers just above the new minimum wage also saw a small increase in wages, but those higher up in the wage scale did not benefit.